Texas Register August 13, 2021 issue

TITLE 1. ADMINISTRATION

PART 15. TEXAS HEALTH ANDHUMAN SERVICES COMMISSIONCHAPTER 355. REIMBURSEMENT RATESSUBCHAPTER F. REIMBURSEMENTMETHODOLOGY FOR PROGRAMS SERVINGPERSONS WITH MENTAL ILLNESS ORINTELLECTUAL OR DEVELOPMENTALDISABILITY1 TAC §355.727The Executive Commissioner of the Texas Health and HumanServices Commission (HHSC) proposes an amendment to§355.727, concerning Add-on Payment Methodology for Homeand Community-Based Services Supervised Living and Resi-dential Support Services.BACKGROUND AND PURPOSEThe purpose of the proposal is to extend the period in whichadd-on payments for Home and Community-based ServicesWaiver (HCS) Supervised Living and Residential Support Ser-vices (SL/RSS) are effective.The proposal is necessary to comply with 2022-23 General Ap-propriations Act, Senate Bill (S.B.) 1, 87th Legislature, RegularSession, 2021 (Article II, HHSC, Rider 30), which requires HHSCto maintain rate increases authorized by the 2020-21 GeneralAppropriations Act, House Bill 1, 86th Legislature, Regular Ses-sion, 2019 (Article II, HHSC, Rider 44).SECTION-BY-SECTION SUMMARYThe proposed amendment to §355.727(b) revises the last datein which HHSC will pay an add-on to the direct care portion ofthe SL/RSS rates from August 31, 2021, to August 31, 2023.The proposed amendment to §355.727(c)(1) revises the periodin which providers may be required to submit cost reports in ad-dition to other reporting requirements. This proposed amend-ment corresponds with the date revision in the proposed changeto subsection (b). The proposed amendment to §355.727(c)(1)also revises the name of HHSC Rate Analysis to reflect the newname of the department, which is the HHSC Provider FinanceDepartment.FISCAL NOTETrey Wood, Chief Financial Officer, has determined that for eachyear of the first five years that the rule will be in effect, there will

be an estimated additional cost to state government as a resultof enforcing and administering the rule as proposed.The effect on state government for each year of the firstfive years the proposed rule is in effect is an estimated costof $5,983,315 in General Revenue (GR) ($16,149,299 inAll Funds (AF)) in state fiscal year (SFY) 2022, $6,330,525in GR ($16,149,299 in AF) in SFY 2023, $6,330,525 inGR ($16,149,299 in AF) in SFY 2024, $6,330,525 in GR($16,149,299 in AF) in SFY 2025, and $6,330,525 in GR($16,149,299 in AF) in SFY 2026.Enforcing or administering the rule does not have foreseeableimplications relating to costs or revenues of local government.GOVERNMENT GROWTH IMPACT STATEMENTHHSC has determined that during the first five years that the rulewill be in effect:(1) the proposed rule will not create or eliminate a governmentprogram;(2) implementation of the proposed rule will not affect the numberof HHSC employee positions;(3) implementation of the proposed rule will result in no assumedchange in future legislative appropriations;(4) the proposed rule will not affect fees paid to HHSC;(5) the proposed rule will not create a new rule;(6) the proposed rule will not expand, limit, or repeal existingrules;(7) the proposed rule will not change the number of individualssubject to the rule; and(8) HHSC has insufficient information to determine the proposedrule's effect on the state's economy.SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM-MUNITY IMPACT ANALYSISTrey Wood has also determined that there will be no adverseeconomic effect on small businesses, micro-businesses, or ruralcommunities. The rules do not impose any additional costs onsmall businesses, micro-businesses, or rural communities thatare required to comply with the rules.LOCAL EMPLOYMENT IMPACTThe proposed rule will not affect a local economy.COSTS TO REGULATED PERSONSTexas Government Code §2001.0045 does not apply to this rulebecause the rule does not impose a cost on regulated personsand is necessary to implement legislation that does not specifi-cally state that §2001.0045 applies to the rule.

PROPOSED RULES August 13, 2021 46 TexReg 4927

PUBLIC BENEFIT AND COSTSVictoria Grady, Director of Provider Finance, has determined thatfor each year of the first five years the rule is in effect, the publicbenefit will be additional funds for HCS providers of SL/RSS,which will enable HCS providers to maintain access to care ingroup home settings.Trey Wood has also determined that for the first five years therule is in effect, there are no anticipated economic costs to per-sons who are required to comply with the proposed rule as it im-plements an extension to add-on payments for HCS providers ofSL/RSS and, therefore, all costs to implement the proposal willbe absorbed by HHSC.TAKINGS IMPACT ASSESSMENTHHSC has determined that the proposal does not restrict or limitan owner's right to their property that would otherwise exist inthe absence of government action and, therefore, does not con-stitute a taking under Texas Government Code §2007.043.PUBLIC COMMENTWritten comments on the proposal may be submitted toHHSC Provider Finance Department, Mail Code H-400,P.O. Box 149030, Austin, Texas 78714-9030, or by email [email protected] be considered, comments must be submitted no later than21 days after the date of this issue of the Texas Register. Com-ments must be (1) postmarked or shipped before the last dayof the comment period; (2) hand-delivered before 5:00 p.m. onthe last working day of the comment period; or (3) emailed be-fore midnight on the last day of the comment period. If last dayto submit comments falls on a holiday, comments must be post-marked, shipped, or emailed before midnight on the followingbusiness day to be accepted. When emailing comments, pleaseindicate "Comments on Proposed Rules 21R147" in the subjectline.STATUTORY AUTHORITYThe amendment is authorized by Texas Government Code§531.0055, which provides that the Executive Commissionerof HHSC shall adopt rules for the operation and provision ofservices by the health and human services system; TexasGovernment Code §531.033, which provides the ExecutiveCommissioner of HHSC with broad rulemaking authority; TexasHuman Resources Code §32.021 and Texas Government Code§531.021(a), which provide HHSC with the authority to adminis-ter the federal medical assistance (Medicaid) program in Texas;and Texas Government Code §531.021(b-1), which establishesHHSC as the agency responsible for adopting reasonable rulesgoverning the determination of fees, charges, and rates formedical assistance (Medicaid) payments under Texas HumanResources Code Chapter 32.The amendment affects Texas Government Code §531.0055,Texas Government Code Chapter 531, and Texas Human Re-sources Code Chapter 32.§355.727. Add-on Payment Methodology for Home and Community-Based Services Supervised Living and Residential Support Services.

(a) (No change.)

(b) Direct Care Staffing Add-on Payment Methodology. Ef-fective January 1, 2020, through August 31, 2023 [August 31, 2021],HHSC will pay an add-on to the direct care portion of the SupervisedLiving and Residential Support Services rates.

(1) The add-on for each level of need (LON) is as follows:

(A) $4.06 per unit for LON 1;

(B) $4.53 per unit for LON 5;

(C) $5.22 per unit for LON 8;

(D) $6.04 per unit for LON 6; and

(E) $8.45 per unit for LON 9.

(2) The add-on is to be used only for attendant compensa-tion as defined in §355.103(b)(1) of this chapter (relating to Specifica-tions for Allowable and Unallowable Costs).

(c) Reporting requirements.

(1) All Home and Community-based Services (HCS)providers who deliver Supervised Living or Residential Support Ser-vices during the time period the add-on is in effect must comply withreporting requirements as described in §355.105(b) of this chapter(relating to General Reporting and Documentation Requirements,Methods, and Procedures) for each reporting period during the timeperiod the add-on is in effect. Providers may be required to submitcost reports in addition to other reporting requirements to includethose days in which the add-on was in effect and [calendar years 2020and 2021] not otherwise included in another report in which account-ability has been determined. This report must be submitted for eachcomponent code if the provider requested participation individuallyor if the provider requested participation as a group. This report willbe used as the basis for determining any recoupment amounts asdescribed in subsection (f) of this section for the direct care staffingadd-on reporting period. Participating providers failing to submit anacceptable Direct Care Staffing Compensation Report within 60 daysof the date of the HHSC request for the report will be placed on vendorhold until such time as an acceptable report is received and processedby the HHSC Provider Finance Department [Rate Analysis].

(2) Providers who do not participate in attendant compen-sation rate enhancement and deliver no Supervised Living or Residen-tial Support Services during the time period the add-on is in effect maybe excused from submitting an accountability report for the years inwhich an HCS cost report is not required.

(d) - (g) (No change.)

The agency certifies that legal counsel has reviewed the pro-posal and found it to be within the state agency's legal authorityto adopt.

Filed with the Office of the Secretary of State on July 30, 2021.TRD-202102968Karen RayChief CounselTexas Health and Human Services CommissionEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 424-6637

♦ ♦ ♦SUBCHAPTER I. REPORTING1 TAC §355.7201The Executive Commissioner of the Texas Health and HumanServices Commission (HHSC) proposes in Texas Administra-tive Code, Title 1, Part 15, Chapter 355, new Subchapter I,§355.7201, concerning Novel Coronavirus (COVID-19) FundReporting.

46 TexReg 4928 August 13, 2021 Texas Register

BACKGROUND AND PURPOSEThe proposal is necessary to comply with the 2022-23 GeneralAppropriations Act, Senate Bill (S.B.) 1, 87th Legislature, Reg-ular Session, 2021 (Article II, HHSC, Rider 143) and S.B. 809,87th Legislature, Regular Session, 2021.The proposed new rule will outline definitions, reporting require-ments, guidelines and procedures for health care institutions, asdefined by Civil Practice and Remedies Code §74.001, includingcertain hospitals and nursing facilities, to report received federalCOVID-19 funding. The COVID funding includes federal moneyreceived under the Coronavirus Aid, Relief, and Economic Se-curity Act (15 U.S.C. §9001 et seq.), the Consolidated Appro-priations Act, 2021 (Pub. L. No. 116-260), and the AmericanRescue Plan Act of 2021 (Pub. L. No. 117-2).The proposed new rule outlines penalties for providers who failto submit the required reports, in alignment with the provisionsof S.B. 809 and Rider 143.HHSC will compile and analyze the data and submit requiredlegislative reports. S.B. 809 requires quarterly reports and Rider143 requires HHSC to submit reports on December 1st and June1st of each fiscal year. Appropriations in Strategy A.2.4, Nurs-ing Facility Payments, for fiscal year 2023 are contingent on thesubmission of the reports due December 1, 2021 and June 1,2022.The required reporting for both the providers and HHSC is antic-ipated to terminate by September 1, 2023.SECTION-BY-SECTION SUMMARYProposed new §355.7201(a) provides an introduction to the sec-tion and explains the requirement to collect and compile legisla-tively required reports pertaining to the COVID-19 federal fund-ing.Proposed new §355.7201(b) provides the applicable terms usedin the section which includes "HHSC" and "health care institu-tions."Proposed new §355.7201(c) lists the institutions that are re-quired to submit the monthly reports to HHSC. This includes allinstitutions that are defined as a health care institution by CivilPractice and Remedies Code§74.001.Proposed new §355.7201(d) describes the reporting require-ments of health care institutions, which include moneys receivedunder the Coronavirus Aid, Relief, and Economic Security Act(15 U.S.C. §9001 et seq.), the Consolidated Appropriations Act,2021 (Pub. L. No. 116-260), and the American Rescue PlanAct of 2021 (Pub. L. No. 117-2).Proposed new §355.7201(e) outlines the frequency of reportingfor the health care institutions. This includes monthly reportswith the initial report due by October 1, 2021. The languagefurther provides that HHSC may grant providers an extension,upon their request.Proposed new §355.7201(f) outlines when HHSC will submitHHSC's legislatively-mandated reports based on the compiledmonthly reports submitted by the institutions.Proposed new §355.7201(g) details the potential penalties forproviders who fail to submit the required reports.Proposed new §355.7201(h) details the duration of the reportingrequirements, which ends on September 1, 2023, or as specifiedby HHSC.

FISCAL NOTETrey Wood, Chief Financial Officer, has determined that for eachyear of the first five years that the rule will be in effect, enforcingor administering the rule do not have foreseeable implicationsrelating to costs or revenues of state government.Local governments that own or operate any of the facilities re-quired to report federal COVID-19 funds could incur costs to re-port under the proposed rule. However, some providers mayhave already been required to submit this information to the fed-eral government, which would reduce the overall cost they wouldincur to provide information already gathered to the state basedon this proposal. HHSC will evaluate available federal reportinginformation and format to minimize duplication where possible.HHSC is unable to provide an estimate of the cost local govern-ments would incur to provide required reports to HHSC.GOVERNMENT GROWTH IMPACT STATEMENTHHSC has determined that during the first five years that the rulewill be in effect:(1) the proposed rule will not create or eliminate a governmentprogram;(2) implementation of the proposed rule will not affect the numberof HHSC employee positions;(3) implementation of the proposed rule will result in no assumedchange in future legislative appropriations;(4) the proposed rule will not affect fees paid to HHSC;(5) the proposed rule will create a new rule;(6) the proposed rule will not expand existing rules;(7) the proposed rule will not change the number of individualssubject to the rule; and(8) HHSC has insufficient information to determine the proposedrule's effect on the state's economy.SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM-MUNITY IMPACT ANALYSISTrey Wood has also determined that the proposal could havean adverse economic effect on small businesses, micro-busi-nesses, and rural communities due to cost to comply pertainingto the monthly report submissions. However, some providersmay have already been required to submit this information tothe federal government, which would reduce the overall costproviders would incur to provide information they have alreadygathered to the state based on this proposal.HHSC is unable to determine the number of small businesses,micro-businesses, and/or rural communities that are subject tothe rule.The proposed rule implements legislation that provides no alter-natives to the rule proposed, and therefore the agency has noregulatory flexibility available or alternative methods of achiev-ing the purpose of the proposed rule.LOCAL EMPLOYMENT IMPACTThe proposed rule will not affect a local economy.COSTS TO REGULATED PERSONSTexas Government Code §2001.0045 does not apply to this rulebecause the rule is necessary to implement legislation that doesnot specifically state that §2001.0045 applies to the rule.


PUBLIC BENEFIT AND COSTSVictoria Grady, Director of Provider Finance, has determined thatfor each year of the first five years the rule is in effect, the publicbenefit will be a better understanding of the type and amount offederal funds that have flowed to health care institutions duringthe COVID-19 public health emergency.Trey Wood has also determined that for the first five years therules are in effect, there could be anticipated economic costs topersons who are required to comply with the proposed rule. Theproposed new rule will require health care institutions, as definedby Civil Practice and Remedies Code §74.001, to report on amonthly basis federal COVID-19 funds received. Providers mayincur a cost to comply pertaining to the monthly report submis-sion; however, HHSC anticipates it is likely that some providersmay have already been required to submit this information tothe federal government, which would reduce the overall costproviders would incur to provide information they have alreadygathered to the state based on this proposal.TAKINGS IMPACT ASSESSMENTHHSC has determined that the proposal does not restrict or limitan owner's right to his or her property that would otherwise existin the absence of government action and, therefore, does notconstitute a taking under Texas Government Code §2007.043.PUBLIC COMMENTWritten comments on the proposal may be submitted toHHSC Provider Finance Department, Mail Code H-400,P.O. Box 149030, Austin, Texas 78714-9030, or by email [email protected] be considered, comments must be submitted no later than21 days after the date of this issue of the Texas Register. Com-ments must be (1) postmarked or shipped before the last dayof the comment period; (2) hand-delivered before 5:00 p.m. onthe last working day of the comment period; or (3) emailed be-fore midnight on the last day of the comment period. If last dayto submit comments falls on a holiday, comments must be post-marked, shipped, or emailed before midnight on the followingbusiness day to be accepted. When emailing comments, pleaseindicate "Comments on Proposed Rule 21R146" in the subjectline.STATUTORY AUTHORITYThe new section is proposed under Texas Government Code§531.033, which authorizes the Executive Commissioner ofHHSC to adopt rules necessary to carry out HHSC's duties;Texas Human Resources Code §32.021 and Texas GovernmentCode §531.021(a), which provide HHSC with the authority toadminister the federal medical assistance (Medicaid) programin Texas; and Texas Government Code §531.021(b-1), whichestablishes HHSC as the agency responsible for adopting rea-sonable rules governing the determination of fees, charges, andrates for medical assistance payments under the Texas HumanResources Code Chapter 32; 2022-23 General AppropriationsAct, S.B. 1, 87th Legislature, Regular Session, 2021 (ArticleII, HHSC, Rider 143); and S.B. 809, 87th Legislature, RegularSession, 2021 (to be codified as new Chapter 81A in TexasHealth and Safety Code, Subtitle D, Title 2), which requiresHHSC to establish procedures for health care institutions toreport required information.The new section affects Texas Government Code Chapter 531;Texas Human Resources Code Chapter 32; 2022-23 General

Appropriations Act, S.B. 1, 87th Legislature, Regular Session,2021 (Article II, HHSC, Rider 143); and S.B. 809, 87th Legisla-ture, Regular Session, 2021 (to be codified as new Chapter 81Ain Texas Health and Safety Code, Subtitle D, Title 2).§355.7201. Novel Coronavirus (COVID-19) Fund Reporting.

(a) Introduction. The Texas Health and Human Services Com-mission (HHSC) collects monthly reports from health care institutionsto compile legislatively-mandated reports. This section outlines the re-porting requirements related to novel coronavirus (COVID-19) federalfund reporting. This section also describes the circumstances in whichpenalities and recoupments will be necessary for certain provider typesfor failure to submit required monthly reports.

(b) Definitions. Unless the context clearly indicates otherwise,the following words and terms when used in this section are defined asfollows.

(1) Health care institution--As defined by Civil Practiceand Remedies Code §74.001.

(2) HHSC--The Texas Health and Human Services Com-mission, or its designee.

(c) Institutions required to complete monthly reports. Healthcare institutions that are required to submit monthly reports include:

(1) an ambulatory surgical center;

(2) an assisted living facility licensed under Texas Healthand Safety Code Chapter 247;

(3) an emergency medical services provider;

(4) a health services district created under Texas Health andSafety Code Chapter 287;

(5) a home and community support services agency;

(6) a hospice;

(7) a hospital;

(8) a hospital system;

(9) an intermediate care facility for the mentally retardedor a home and community-based services waiver program for personswith mental retardation adopted in accordance with the Social SecurityAct §1915(c) (42 U.S.C. §1396n), as amended;

(10) a nursing home; and

(11) an end stage renal disease facility licensed under TexasHealth and Safety Code §251.011.

(d) Reporting requirements. A health care institution is re-quired to report on moneys received under the Coronavirus Aid, Relief,and Economic Security Act (15 U.S.C. §9001 et seq.), the ConsolidatedAppropriations Act, 2021 (Pub. L. No. 116-260), and the AmericanRescue Plan Act of 2021 (Pub. L. No. 117-2). HHSCmay also requestadditional information related to direct or indirect costs associated withCOVID that have impacted the provider's business operation and anyother information HHSC deems necessary to appropriately contextu-alize the moneys received as described in this subsection. HHSC willcollect information and the requested data may vary by provider typebased on legislative direction.

(e) Frequency of reporting.

(1) Submission of data will be required on a monthly basis.

(2) Initial reporting will begin on September 1, 2021, and isdue by October 1, 2021. The initial reporting period will be for January31, 2020, through August 31, 2021. HHSC may choose to grant the


provider an extension of up to 15 calendar days if the provider notifiesHHSC that additional time is required to submit the initial report priorto the due date.

(3) Subsequent monthly reports will be due by the first dayof each month and will cover the time-period two months prior. Forexample, the report due November 1, 2021, will cover September 1,2021 through September 30, 2021. HHSC may grant the provider anextension of no more than 15 calendar days if the provider notifiesHHSC that more time is needed prior to the due date.

(f) HHSC legislatively-mandated reports. HHSCwill compilereports based on submitted data and submit the reports on a quarterlybasis to the Governor, Legislative Budget Board, and any appropriatestanding committee in the Legislature. Quarterly reports will be sub-mitted beginning December 1, 2021, and continueMarch 1, June 1, andSeptember 1 thereafter. Upon conclusion of the PHE, the submissionfrequency may be reduced to semi-annually on December 1 and June1 of each fiscal year.

(g) Penalties for failure to report. Specified providers are re-quired to report information as requested on a monthly basis to HHSC.

(1) A facility that does not report requested informationwill be identified by name and a unique identifying number, such asNational Provider Identification number, in HHSC's legislatively-man-dated reports.

(2) Failure to report 2 or more times in a 12-month periodwill result in notification to the appropriate licensing authority whomaytake disciplinary action against a health care institution that violates thischapter as if the institution violated an applicable licensing law.

(3) Failure to report will result in the issuance of a vendorhold on future payments to the identified provider after 30 days follow-ing the due date of the required report. The vendor hold will be releasedafter the provider has submitted all delinquent reports to HHSC.

(4) Appropriations in 2022-23 General AppropriationsAct, Senate Bill (S.B.) 1, 87th Legislature, Regular Session, 2021(Article II, HHSC) Strategy A.2.4, Nursing Facility Payments, forfiscal year 2023 are contingent on the submission of the reports dueDecember 1, 2021, and June 1, 2022. If HHSC is unable to utilizeappropriations for nursing facilities from Strategy A.2.4 as a result ofinsufficient reporting from providers, HHSCwill suspend all paymentsto providers until such a time as HHSC is authorized to continuemaking expenditures under Strategy A.2.4.

(h) Duration. This reporting requirement ends on August 31,2023 or as specified by HHSC.



♦ ♦ ♦SUBCHAPTER J. PURCHASED HEALTHSERVICES

DIVISION 4. MEDICAID HOSPITALSERVICES1 TAC §355.8061The Executive Commissioner of the Texas Health and HumanServices Commission (HHSC) proposes an amendment to§355.8061, concerning Outpatient Hospital Reimbursement.BACKGROUND AND PURPOSEThe purpose of the amendment is to comply with Senate Bill(S.B.) 1 , Article II, HHSC, Rider 8(f), 87th Legislature, RegularSession 2021, and to make other amendments to enhance clar-ity, consistency, and specificity. HHSC is required by S.B. 1 toallocate certain funds appropriated to provide an increase to out-patient reimbursement rates for rural hospitals. HHSC proposesan increase to outpatient services reimbursement by removingthe cap that was established September 1, 2013, and applyinga percentage increase to the cost to charge ratios for rural hos-pitals.The proposed amendment will also eliminate the cost settlementof payments to maintain the level of payment directed by therider. Rider 8 states that reimbursement for outpatient emer-gency department services which do not qualify as emergencyvisits may not exceed 65 percent of cost. Therefore, HHSC pro-poses a decrease in the allowable charges to 55 percent forthese services to accommodate the increase in cost to chargeratios and retain the payments below 65 percent of cost.Pursuant to S.B. 170, 86th Legislature, Regular Session,2019 and S.B. 1621, 86th Legislature, Regular Session, 2019,HHSC's managed care contracts require managed care or-ganizations to reimburse rural hospitals using a minimum feeschedule for services delivered through the Medicaid managedcare program. The proposed amendment adds subsection(e), requiring a Medicaid minimum fee schedule for all ruralhospitals, to conform the rule to the current law as well.In addition, HHSC proposes to explain the cost to charge ratio(CCR) rate setting process by including a section specific to ruralhospitals.SECTION-BY-SECTION SUMMARYThe proposed amendment to §355.8061(a) adds two clarifyingedits.The proposed amendment to §355.8061(b)(2) adds "non-rural"to be specific about the outpatient interim rate determination fornon-rural hospitals and the "default" interim rate.Proposed new paragraph §355.8061(b)(3) specifies the outpa-tient interim rate determination and claim reimbursement for ruralhospitals. New subparagraph (D) eliminates cost settlement ofoutpatient services for rural hospitals.Proposed new subsection §355.8061 creates new subsection(e) to clarify the minimum fee schedule requirement for ManagedCare Organizations.FISCAL NOTETrey Wood, Chief Financial Officer, has determined that for eachyear of the first five years that the rule will be in effect, there willbe a fiscal impact to the state of a cost of $12,001,619 GeneralRevenue (GR) ($32,393,035 All Funds (AF) for State Fiscal Year(SFY) 2022, and $13,002,823 GR ($33,170,468 AF) each yearfor SFY 2023 through SFY 2026.


For each year of the first five years that the rule will be in effect,enforcing or administering the rule has implications relating torevenues of local governments. The effect is projected to be anet increase to revenues of local governments of approximately$5,087,125 GR ($13,730,432 AF) for SFY 2022, and $5,382,330GR, ($13,730,433 AF) each year for SFY 2023 - SFY 2026.GOVERNMENT GROWTH IMPACT STATEMENTHHSC has determined that during the first five years that the rulewill be in effect:(1) the proposed rule will not create or eliminate a governmentprogram;(2) implementation of the proposed rule will not affect the numberof HHSC employee positions;(3) implementation of the proposed rule will not require an in-crease in future legislative appropriations;(4) the proposed rule will not affect fees paid to HHSC;(5) the proposed rule will not create a new rule;(6) the proposed rule will not expand, limit, or repeal an existingrule;(7) the proposed rule will not change the number of individualssubject to the rule; and(8) the proposed rule will not affect the state's economy.SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM-MUNITY IMPACT ANALYSISTrey Wood has also determined that there will be no adverseeconomic effect on small businesses or micro-businesses. Thisrule amendment increases funding for rural hospitals and thereare no hospitals in Texas receiving Medicaid that are small busi-nesses or micro-businesses.LOCAL EMPLOYMENT IMPACTThe proposed rule will not affect a local economy.COSTS TO REGULATED PERSONSTexas Government Code §2001.0045 does not apply to this rulebecause the rule does not impose a cost on regulated persons.PUBLIC BENEFIT AND COSTSVictoria Grady, Director of Provider Finance, has determined thatfor each year of the first five years the rule is in effect, the publicbenefit will be an increase to outpatient rates for rural hospitals,therefore paying the hospitals more closely to the cost of provid-ing Medicaid outpatient services. An additional benefit includesclarification of language specific to the outpatient interim rate de-termination for non-rural and rural hospitals.Trey Wood, Chief Financial Officer, has also determined that forthe first five years the rule is in effect, there are no anticipatedeconomic costs to persons who are required to comply with theproposed rule. There is no requirement to alter current businesspractices and no new fees or costs imposed on those requiredto comply.TAKINGS IMPACT ASSESSMENTHHSC has determined that the proposal does not restrict or limitan owner's right to his or her property that would otherwise existin the absence of government action and, therefore, does notconstitute a taking under Texas Government Code §2007.043.

PUBLIC HEARINGA public hearing to receive comments on the proposal willbe held by HHSC through a webinar. The meeting dateand time will be posted on the HHSC Communications andEvents website at: https://hhs.texas.gov/about-hhs/communica-tions-events and the HHSC Provider Finance Hospitals websiteat: https://pfd.hhs.texas.gov/provider-finance-communications.Please contact Valerie Lesak at [email protected] if you have questions.PUBLIC COMMENTQuestions about the content of this proposal may be directed toValerie Lesak in the HHSC Provider Finance for Hospitals de-partment at [email protected] comments on the proposal may be submitted to theHHSC Provider Finance Department, North Austin Complex,4601 Guadalupe St, Austin, Texas 78751 (Mail Code H-400);P.O. Box 149030, Austin, Texas 78714-9030 (Mail CodeH-400); by fax to (512)-730-7475; or by email to [email protected] be considered, comments must be submitted no later than21 days after the date of this issue of the Texas Register. Com-ments must be (1) postmarked or shipped before the last day ofthe comment period; (2) hand-delivered before 5:00 p.m. on thelast working day of the comment period; or (3) faxed or emailedbefore midnight on the last day of the comment period. If lastday to submit comments falls on a holiday, comments must bepostmarked, shipped, or emailed before midnight on the follow-ing business day to be accepted. When faxing or emailing com-ments, please indicate "Comments on Proposed Rule 21R141"in the subject line.STATUTORY AUTHORITYThe amendment is proposed under Texas Government Code§531.033, which authorizes the Executive Commissioner ofHHSC to adopt rules necessary to carry out HHSC's duties;Texas Human Resources Code §32.021 and Texas GovernmentCode §531.021(a), which provide HHSC with the authorityto administer the federal medical assistance (Medicaid) pro-gram in Texas; Texas Government Code §531.021(b-1), whichestablishes HHSC as the agency responsible for adoptingreasonable rules governing the determination of fees, charges,and rates for medical assistance payments under the TexasHuman Resources Code, Chapter 32; and Texas GovernmentCode §531.02194, which requires adoption of a prospectivereimbursement methodology for the payment of rural hospitals.The amendment affects Texas Government Code Chapter 531,and Texas Human Resources Code Chapter 32.§355.8061. Outpatient Hospital Reimbursement.

(a) Introduction. The Texas Health and Human Services Com-mission (HHSC), or its designee, reimburses outpatient hospital ser-vices under the reimbursement methodology described in this section.Except as described in subsections (c) and (d) of this section, HHSCwill reimburse for outpatient hospital services based on a percentageof allowable charges and an outpatient interim rate.

(b) Interim reimbursement.

(1) HHSC will determine a percentage of allowablecharges, which are charges for covered Medicaid services determinedthrough claims adjudication.


(A) For high volume providers that received Medicaidoutpatient payments equaling at least $200,000 during calendar year2004.

(i) For children's hospitals and state-owned hospi-tals as defined in §355.8052 of this division (relating to Inpatient Hospi-tal Reimbursement), the percentage of allowable charges is 76.03 per-cent, except as described in subparagraph (C) of this paragraph.

(ii) For rural hospitals as defined in §355.8052 ofthis division, the percentage of allowable charges is 100 percent.

(iii) For all other providers, the percentage of allow-able charges is 72.00 percent.

(B) For all providers not considered high volumeproviders as determined in paragraph (1)(A) of this subsection.

(i) For children's hospitals and state-owned hospi-tals as defined in §355.8052 of this division, the percentage of allow-able charges is 72.27 percent, except as described in subparagraph (C)of this paragraph.

(ii) For rural hospitals as defined in §355.8052 ofthis division, the percentage of allowable charges is 100 percent.

(iii) For all other providers, the percentage of allow-able charges is 68.44 percent.

(C) For children's hospitals:

(i) The percentage of allowable charges described insubparagraphs (A)(i) and (B)(i) of this paragraph are subject to the priorwritten approval of the Legislative Budget Board and the Governor,as required by the 2014-2015 General Appropriations Act (Article II,Health and Human Services Comm., S.B. 1, 83rd Leg., Regular Ses-sion, 2013, Rider 83 and Special Provisions Relating to All Health andHuman Services Agencies, Section 44, Rate Limitations and ReportingRequirements).

(ii) If the percentages of allowable charges de-scribed in subparagraphs (A)(i) and (B)(i) of this paragraph are notapproved as described in clause (i) of this subparagraph, the percent-ages of allowable charges described in subparagraphs (A)(iii) and(B)(iii) of this paragraph apply.

(D) For outpatient emergency department (ED) ser-vices that do not qualify as emergency visits, which are listed in theTexas Medicaid Provider Procedures Manual and other updates on theclaims administrator's website, HHSC will reimburse:

(i) rural hospitals, as defined in §355.8052 of this di-vision, an amount not to exceed 65 percent of allowable charges afterapplication of the methodology in paragraph (2)(C) of this subsection,which will result in a payment that does not exceed 65 percent of al-lowable cost; and

(ii) all other hospitals, a flat fee set at a percentageof the Medicaid acute care physician office visit amount for adults.

(2) HHSC will determine an outpatient interim rate foreach non-rural hospital, which is the ratio of Medicaid allowableoutpatient costs to Medicaid allowable outpatient charges derivedfrom the hospital's Medicaid cost report.

(A) For a non-rural hospital with at least one tentativecost report settlement completed prior to September 1, 2013, the in-terim rate is the rate in effect on August 31, 2013, except the hospitalwill be assigned the interim rate calculated upon completion of any fu-ture cost report settlement if that interim rate is lower.

(B) For a non-rural new hospital that does not have atleast one tentative cost report settlement completed prior to September1, 2013, the default interim rate is 50 percent until the interim rate isadjusted as follows:

(i) If the non-rural hospital files a short-period costreport for its first cost report, the hospital will be assigned the interimrate calculated upon completion of the hospital's first tentative cost re-port settlement.

(ii) The hospital will be assigned the interim rate cal-culated upon completion of the hospital's first full-year tentative costreport settlement.

(iii) The hospital will retain the interim rate calcu-lated as described in clause (ii) of this subparagraph, except it will beassigned the interim rate calculated upon completion of any future costreport settlement if that interim rate is lower.

(C) Interim claim reimbursement for non-rural hospi-tals is determined by multiplying the amount of a hospital's outpatientallowable charges after applying any reductions to allowable chargesmade under paragraph (1) of this subsection by the outpatient interimrate in effect on the date of service.

(D) Cost settlement. Interim claim reimbursement de-termined in subparagraph (C) of this paragraph will be cost-settled atboth tentative and final audit of a non-rural hospital's cost report. Thecalculation of allowable costs will be determined based on the amountof allowable charges after applying any reductions to allowable chargesmade under paragraph (1) of this subsection.

(i) Interim payments for claims with a date of ser-vice prior to September 1, 2013, will be cost settled.

(ii) Interim payments for claims with a date of ser-vice on or after September 1, 2013, will be included in the cost reportinterim rate calculation, but will not be adjusted due to cost settlementunless the settlement calculation indicates an overpayment.

(iii) HHSC will calculate an interim rate at tentativeand final cost settlement for the purposes described in subparagraph(B) of this paragraph.

(iv) If a hospital's interim claim reimbursement forall outpatient services, excluding imaging, clinical lab and outpatientemergency department services that do not qualify as emergency vis-its, for the hospital's fiscal year exceeded the allowable costs for thoseservices, HHSC will recoup the amount paid to the hospital in excessof allowable costs.

(v) If a hospital's interim claim reimbursement forall outpatient services, excluding imaging, clinical lab and outpatientemergency department services that do not qualify as emergency visits,for the hospital's fiscal year was less than the allowable costs for thoseservices, HHSC will not make additional payments through cost settle-ment to the hospital for service dates on or after September 1, 2013.

(3) HHSC will determine an outpatient interim rate foreach rural hospital, which is the ratio of Medicaid allowable outpatientcosts to Medicaid allowable outpatient charges derived from thehospital's Medicaid cost report.

(A) For a rural hospital with at least one tentative costreport settlement completed prior to September 1, 2021, the interimrate effective on September 1, 2021, is the rate calculated in the latestinitial cost report with an additional percentage increase, not to exceedan interim rate of 100 percent. After September 1, 2021, a rural hospi-tal will be assigned the interim rate calculated upon completion of each


initial or amended initial cost report, with an additional percentage in-crease, not to exceed an interim rate of 100 percent.

(B) For a new rural hospital that does not have at leastone initial cost report completed prior to September 1, 2021, the defaultinterim rate is 50 percent until the interim rate is adjusted as follows.

(i) If the rural hospital files a short-period cost reportfor their first cost report, the hospital will continue to receive the defaultrate until completion of the first full-year initial cost report.

(ii) The rural hospital will be assigned the interimrate calculated upon completion of a review of the hospital's first full-year initial or amended initial cost report, with an additional percentageincrease, not to exceed an interim rate of 100 percent.

(C) Interim claim reimbursement for a rural hospital isdetermined by multiplying the amount of a hospital's outpatient allow-able charges after applying any reductions to allowable charges madeunder paragraph (1) of this subsection by the outpatient interim rate ineffect on the date of service as described in subparagraph (A) of thisparagraph.

(D) Interim claim reimbursement determined in sub-paragraph (C) of this paragraph will not be cost-settled for servicesrendered on or after September 1, 2021.

(c) Outpatient hospital surgery. Outpatient hospital non-emer-gency surgery is reimbursed in accordance with the methodology forambulatory surgical centers as described in §355.8121 of this subchap-ter (relating to Reimbursement).

(d) Outpatient hospital imaging.

(1) For all hospitals except rural hospitals, as defined in§355.8052 of this division, outpatient hospital imaging services arenot reimbursed under the outpatient reimbursement methodology de-scribed in subsection (b) of this section. Outpatient hospital imagingservices are reimbursed according to an outpatient hospital imagingservice fee schedule that is based on a percentage of the Medicare Out-patient Prospective Payment System fee schedule for similar services.If a resulting fee for a service provided to any Medicaid beneficiaryis greater than 125 percent of the Medicaid adult acute care fee for asimilar service, the fee is reduced to 125 percent of the Medicaid adultacute care fee.

(2) For rural hospitals, outpatient hospital imaging ser-vices are reimbursed based on a percentage of the Medicare OutpatientProspective Payment System fee schedule for similar services.

(e) Minimum Fee Schedule. Effective March 1, 2021, Man-aged Care Organizations are required to reimburse rural hospitals basedon a minimum fee schedule. The minimum fee schedules are the ratesspecific to rural hospitals, as described in subsections (b) through (d).



♦ ♦ ♦

TITLE 13. CULTURAL RESOURCES

PART 2. TEXAS HISTORICALCOMMISSIONCHAPTER 13. TEXAS HISTORICPRESERVATION TAX CREDIT PROGRAM13 TAC §13.1, §13.5The Texas Historical Commission (Commission) proposesamendments to 13 Texas Administrative Code, §13.1 and §13.5,concerning the Texas Historic Preservation Tax Credit Program.The proposed amendments collectively clarify certain programdefinitions and requirements, through edits, additions, and dele-tions.Section 13.1 provides definitions for the program, which helpshape application and review requirements. Superfluousinformation is removed from §13.1(10), which defines theCommission. Section 13.1(5), which defines eligible costs andexpenses has historically copied language directly from theprogram statute in the Texas Tax Code. Legislation passedin the 2021 legislative session will alter this language whenenacted on January 1, 2022. Rather than copy the future statutelanguage at the time that it changes, and again when any futurechanges are made, this amendment provides a more generalreference. Section 13.1(19) receives new language to tie therequirements for a phased development to the new definition fora project, which is now §13.1(21). This new definition providesguidance for the types of work items that make up a projectthat can be submitted as part of an application for review andapproval. Amendments to §13.1(20) provide for additionalforms of documentation related to a project's completion dateand bring the administrative rules in line with program practice.Section 13.5 lays out the requirements for the Part C application,which presents a completed architectural project for final certifi-cation by the Commission. Section 13.5(2) is deleted as an ap-plicant's tax identification numbers are not required for the Com-mission's purposes and have not been collected. New §13.5(4),which outlines required documentation of a placed in servicedate, is amended to reflect the edits to §13.1(20).FISCAL NOTE. Mark Wolfe, Executive Director, has determinedthat for each of the first five-years the proposed amendments arein effect, there will not be a fiscal impact on state or local govern-ment as a result of enforcing or administering the proposed rulebecause the amendments clarify existing policies and programrequirements and update references to statutes.PUBLIC BENEFIT/COST NOTE. Mr. Wolfe has also determinedthat for the first five-year period the amended rules are in effect,the public benefit will be a clearer understanding of all programrequirements and policies.ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCALEMPLOYMENT. Because the proposed amendments clarify ex-isting procedures and policies and do not add new requirements,there are no anticipated economic costs to persons who are re-quired to comply with the proposed rule. There is no effect onlocal economy for the first five years that the proposed new sec-tion is in effect; therefore, no local employment impact state-ment is required under Texas Government Code, §2001.022 and§2001.024(a)(6).


COSTS TO REGULATED PERSONS. The proposed newsection does not impose a cost on regulated persons, includinganother state agency, a special district, or a local governmentand, therefore, is not subject to Texas Government Code,§2001.0045.ECONOMIC IMPACT STATEMENT AND REGULATORYFLEXIBILITY ANALYSIS FOR SMALL BUSINESSES, MI-CROBUSINESSES, AND RURAL COMMUNITIES. Mr. Wolfehas also determined that there will be no impact on rural com-munities, small businesses, or microbusinesses as a result ofimplementing these amendments and therefore no regulatoryflexibility analysis, as specified in Texas Government Code§2006.002, is required.GOVERNMENT GROWTH IMPACT STATEMENT. In ac-cordance with Texas Government Code, §2006.0221, theCommission makes the following determinations. During thefirst five years that the amendments would be in effect, the pro-posed amendments: will not create or eliminate a governmentprogram; will not result in the addition or reduction of employ-ees; will not require an increase or decrease in future legislativeappropriations; will not lead to an increase or decrease in feespaid to a state agency; will not create a new regulation; will notrepeal an existing regulation; and will not result in an increase ordecrease in the number of individuals subject to the rule. Duringthe first five years that the amendments would be in effect, theproposed amendments will not positively or adversely affect theTexas economy.TAKINGS IMPACT ASSESSMENT. The Commission has deter-mined that no private real property interests are affected by thisproposal and the proposal does not restrict or limit an owner'sright to his or her property that would otherwise exist in the ab-sence of government action and, therefore, does not constitutea taking under Texas Government Code, §2007.043.REQUEST FOR PUBLIC COMMENT. Comments on the pro-posed amendments may be submitted to Mark Wolfe, ExecutiveDirector, Texas Historical Commission, P.O. Box 12276, Austin,Texas 78711. Comments will be accepted for 30 days after pub-lication in the Texas Register.STATUTORY AUTHORITY. These amendments are proposedunder the authority of Texas Government Code §442.005(q),which provides the Commission with the authority to promulgaterules to reasonably affect the purposes of the Commission andthe Texas Tax Code §171.909, which requires the Commission toadopt rules for the implementation of the rehabilitation tax creditprogram.CROSS REFERENCE TO STATUTE. These amendments areproposed under the authority of Texas Tax Code §171.009,which requires the Commission to adopt rules for the implemen-tation of the Tax Credit for Certified Rehabilitation of CertifiedHistoric Structures. The proposed amendment implementsSubchapter S of the Texas Tax Code. No other statutes, articles,or codes are affected by these amendments.§13.1. Definitions.

The following words and terms when used in these rules shall have thefollowing meanings unless the context clearly indicates otherwise:

(1) Applicant--The entity that has submitted an applicationfor a building or structure it owns or for which it has a contract topurchase.

(2) Application--A fully completed Texas Historic Preser-vation Tax Credit Application form submitted to the Commission,which includes three parts:

(A) Part A - Evaluation of Significance, to be used bythe Commission to make a determination whether the building is a cer-tified historic structure;

(B) Part B - Description of Rehabilitation, to be used bythe Commission to review proposed projects for compliance with theStandards for Rehabilitation; and

(C) Part C - Request for Certification of CompletedWork, to be used by the Commission to review completed projects forcompliance with the work approved under Part B.

(3) Application fee--The fee charged by the Commissionand paid by the applicant for the review of Part B and Part C of theapplication as follows:Figure: 13 TAC §13.1(3) (No change.)

(4) Audited cost report--Such documentation as defined bythe Comptroller in 34 TAC Chapter 3, Tax Administration.

(5) Building--Any edifice enclosing a space within itswalls, and usually covered by a roof, the purpose of which is prin-cipally to shelter any form of human activity, such as shelter orhousing, or to provide working, office, parking, display, or sales space.The term includes among other examples, banks, office buildings,factories, warehouses, barns, railway or bus stations, and stores andmay also be used to refer to a historically and functionally relatedunit, such as a courthouse and jail or a house and barn. Functionalconstructions made usually for purposes other than creating humanshelter or activity such as bridges, windmills, and towers are notconsidered buildings under this definition and are not eligible to becertified historic structures.

(6) Certificate of Eligibility--A document issued by theCommission to the owner, following review and approval of a Part Capplication, that confirms the property to which the eligible costs andexpenses relate is a certified historic structure and the rehabilitationsqualifies as a certified rehabilitation; and specifies the date the certifiedhistoric structure was first placed in service after the rehabilitation.

(7) Certified historic structure--A building or buildings lo-cated on a property in Texas that is certified by the Commission as:

(A) listed individually in the National Register of His-toric Places;

(B) designated as a Recorded Texas Historic Landmarkunder §442.006, Texas Government Code, or as a State AntiquitiesLandmark under Chapter 191, Texas Natural Resources Code; §21.6and §26.3(63) - (64) of this title; or

(C) certified by the Commission as contributing to thehistoric significance of:

(i) a historic district listed in the National Registerof Historic Places; or

(ii) a certified local district as per 36 CFR §67.9.

(8) Certified local district--A local historic district certifiedby the United States Department of the Interior in accordance with 36C.F.R §67.9.

(9) Certified rehabilitation--The rehabilitation of a certifiedhistoric structure that the Commission has certified asmeeting the Stan-dards for Rehabilitation. If the project is submitted for the federal re-habilitation tax credit it must be reviewed by the National Park Serviceprior to a determination that it meets the requirements for a certified


rehabilitation under this rule. In the absence of a determination for thefederal rehabilitation tax credit, the Commission shall have the sole re-sponsibility for certifying the project.

(10) Commission--The Texas Historical Commission.[For the purpose of notification or filing of any applications or corre-spondence, delivery shall be made via postal mail to: Texas HistoricPreservation Tax Credit Program, Texas Historical Commission, P.O.Box 12276, Austin, Texas 78711-2276; or by overnight delivery at:Texas Historic Preservation Tax Credit Program, Texas HistoricalCommission, 1700 North Congress Avenue, Suite B-65, Austin, Texas78701.]

(11) Comptroller--The Texas Comptroller of Public Ac-counts.

(12) Contributing--A building in a historic district consid-ered to be historically, culturally, or architecturally significant accord-ing to the criteria established by state or federal government, includ-ing those formally promulgated by the National Park Service and theUnited Sates Department of the Interior at 36 C.F.R. Part 60 and appli-cable national Register bulletins.

(13) Credit--The tax credit for the certified rehabilitationof certified historic structures available pursuant to Chapter 171, Sub-chapter S of the Texas Tax Code.

(14) District--A geographically definable area, urban, orrural, possessing a significant concentration, linkage, or continuity ofsites, building, structures, or objects united by past events geographi-cally but linked by association or history.

(15) Eligible costs and expenses--The qualified rehabilita-tion expenditures as defined by §47(c)(2), Internal Revenue Code, in-cluding rehabilitation expenses as set out in 26 C.F.R. §1.48-12(c), in-curred during the project, except as otherwise specified in Chapter 171,Subchapter S of the Texas Tax Code. [The depreciation and tax-exemptuse provisions of §47(c)(2) do not apply to the costs and expenses in-curred by an entity exempt from the tax imposed by §171.063 of theTax Code or by authorized investment of public funds, governed byChapter 2256 by an institution of higher education or university sys-tem as defined by §61.003, Education Code if the other provisions of§47(c)(2) are met.]

(16) Federal rehabilitation tax credit--A federal tax creditfor 20 % of qualified rehabilitation expenditures with respect to a cer-tified historic structure, as defined in §47, Internal Revenue Code; 26C.F.R. §1.48-12; and 36 C.F.R. Part 67.

(17) National Park Service--The agency of the U.S. De-partment of the Interior that is responsible for certifying projects toreceive the federal rehabilitation tax credit.

(18) Owner--A person, partnership, company, corporation,whether for profit or not, governmental body, an institution of highereducation or university system or any other entity holding a legal orequitable interest in a Property or Structure, which can include a fullor partial ownership interest. A long-term lessee of a property may beconsidered an owner if their current lease term is at a minimum 27.5years for residential rental property or 39 years for nonresidential realproperty, as referenced by §47(c)(2), Internal Revenue Code.

(19) Phased development--A rehabilitation project whichmay reasonably be expected to be completed in two or more distinctstates of development, as defined by United States Treasury Regulation26 C.F.R. §1.48-12(b)(2)(v). Each phase of a phased development canindependently support an Application for a credit as though [thought]it was a stand-alone rehabilitation, as long as each phase meets the def-inition of a Project. If any completed phase of the rehabilitation project

does not meet the requirements of a certified rehabilitation, future ap-plications by the same owner for the same certified historic structurewill not be considered.

(20) Placed in Service--A status obtained upon completionof the rehabilitation project as described in the Part B application, andany subsequent amendments, and documented in the Part C applica-tion [when the building is ready to be reoccupied and any permits andlicenses needed to occupy the building have been issued]. Evidenceof the date a property is placed in service includes a certificate of oc-cupancy issued by the local building official and/or an architect's cer-tificate of substantial completion. Other documents will suffice whencertificates of occupancy and/or substantial completion are not avail-able for a specific project, including final contractor invoices or otherverifiable statements of completion. Alternate documents should beapproved by the Commission before submission. Placed in Servicedocumentation must indicate the date that work was completed.

(21) Project--A specified scope of work, as described in arehabilitation plan submitted with a Part B application and subsequentamendments, comprised of work items that will be fully completedand Placed in Service. Examples of a project may include, but arenot limited to, a whole building rehabilitation, rehabilitation of indi-vidual floors or spaces within a building, repair of building features,or replacement of building systems (such as mechanical, electrical,and plumbing systems). Partial or incomplete scopes of work, suchas project planning and design, demolition, or partial completion ofspaces, features, or building systems are not included in this definitionas projects. Per §13.6(d)(5) of this title, the Commission's review en-compasses the entire building and site even if other work items are notincluded in a submitted project.

(22) [(21)] Property--A parcel of real property containingone or more buildings or structures that is the subject of an applicationfor a credit.

(23) [(22)] Rehabilitation--The process of returning abuilding or buildings to a state of utility, through repair or alteration,which makes possible an efficient use while retaining those portionsand features of the building and its site and environment which aresignificant.

(24) [(23)] Rehabilitation plan--Descriptions, drawings,construction plans, and specifications for the proposed rehabilitationof a certified historic structure in sufficient detail to enable the Com-mission to evaluate compliance with the Standards for Rehabilitation.

(25) [(24)] Standards for Rehabilitation--The United StatesSecretary of the Interior's Standards for Rehabilitation as defined in§67.7.

(26) [(25)] Structure--A building; see also certified historicstructure.

(27) [(26)] Tax Credit--A credit earned against either thestate franchise tax or the insurance premium tax per §171 of the TexasTax Code and any limitations provided therein.

§13.5. Request for Certification of Completed Work.

(a) Application Part C - Request for Certification of Com-pleted Work. Part C of the application requires information to allowthe Commission to certify the completed work follows the Standardsfor Rehabilitation and the rehabilitation plan as approved by theCommission in the Part B review. Part C may be submitted when theproject is placed in service.

(b) Application requirements. Information to be submitted inthe Part C includes:


(1) Name, mailing address, telephone number, and emailaddress of the property owner(s);

[(2) Tax identification number(s);]

(2) [(3)] Name and address of the property;

(3) [(4)] Photographs of the completed work showing sim-ilar views of the photographs provided in Parts A and B. Photographsmust be formatted as directed by the Commission in published pro-gram guidance materials on the Commission's online Texas HistoricPreservation Tax Credit Application Guide available by accessingthc.texas.gov;

(4) [(5)] Evidence of the placed in service date, such as acertificate of occupancy issued by the local building official, [or a] cer-tificate of substantial completion, final invoice issued by a contractor,or alternative documentation approved by the Commission; and

(5) [(6)] Other information required on the application bythe Commission.


Filed with the Office of the Secretary of State on July 29, 2021.TRD-202102943Mark WolfeExecutive DirectorTexas Historical CommissionEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 463-6100

♦ ♦ ♦TITLE 16. ECONOMIC REGULATION

PART 2. PUBLIC UTILITYCOMMISSION OF TEXASCHAPTER 25. SUBSTANTIVE RULESAPPLICABLE TO ELECTRIC SERVICEPROVIDERSThe Public Utility Commission of Texas (commission) proposesamendments to existing 16 Texas Administrative Code (TAC)§25.43, 25.471, 25.475, 25.479, and 25.498. The commissionalso proposes new 16 TAC §25.499, relating to Acknowledge-ment of Risk Requirements for Certain Commercial Contracts.These proposed rules will implement an amendment to TexasUtilities Code §17.003(d-1)(c) enacted by the 87th Texas Leg-islature requiring electric utilities and retail electric providers toperiodically provide to customers information concerning loadshed, type of customers and procedure to be considered for crit-ical care or critical load, and reducing electricity use at timeswhen involuntary load shed events may be implemented. Theseproposed rules will also prohibit the offering of wholesale indexedproducts to residential or small commercial customers and re-quire customers other than residential or small commercial cus-tomers to sign an acknowledgement of risk prior to enrolling inany indexed products or products that contain a separate as-sessment for ancillary service charges. Finally, these amend-ments will pass additional, related customer protections.

The commission also requests comment from interested per-sons on the following questions:1. Should the maximum rate for provider of last resort servicethat is charged by a large service provider to a residential cus-tomer in proposed §25.43(m)(2)(A)(iii) and small and mediumnon-residential customers in proposed §25.43(m)(2)(B)(iv) in-clude a safety threshold to prevent the energy charge from in-creasing by more than a certain percentage on a year-to-yearbasis? If so, what is an appropriate safety threshold?2. Do the acknowledgement of risk requirements in proposed§25.475(c)(3)(G) and §25.475(j) provide adequate customerprotections for residential and small commercial customers thatenroll in indexed retail electric products and retail electric prod-ucts that allow for the pass-through of ancillary service charges?If not, should these products be prohibited for residential andsmall commercial customers?Comments responding to these questions should be filed in ac-cordance with the instructions below under the heading "PublicComments."Growth Impact StatementThe agency provides the following governmental growth impactstatement for the proposed rule, as required by Texas Govern-ment Code §2001.0221. The agency has determined that foreach year of the first five years that the proposed rule is in ef-fect, the following statements will apply:(1) the proposed rule will not create a government program andwill not eliminate a government program;(2) implementation of the proposed rule will not require the cre-ation of new employee positions and will not require the elimina-tion of existing employee positions;(3) implementation of the proposed rule will not require an in-crease and will not require a decrease in future legislative ap-propriations to the agency;(4) the proposed rule will not require an increase and will notrequire a decrease in fees paid to the agency;(5) the proposed rule will create a new regulation to implementPURA §39.110 as enacted by the 87th Texas Legislature;(6) the proposed rule will not expand, limit, or repeal an existingregulation;(7) the proposed rule will change the number of individuals sub-ject to the rule's applicability by applying certain minor provisionsof §25.475 to brokers and transmission and distribution utilities;and(8) the proposed rule will not affect this state's economy.Fiscal Impact on Small and Micro-Businesses and RuralCommunitiesThere is no adverse economic effect anticipated for small busi-nesses, micro-businesses, or rural communities as a result ofimplementing the proposed rule. Accordingly, no economic im-pact statement or regulatory flexibility analysis is required underTexas Government Code §2006.002(c).Takings Impact AnalysisThe commission has determined that the proposed rule will notbe a taking of private property as defined in chapter 2007 of theTexas Government Code.


Fiscal Impact on State and Local GovernmentCliff Crouch, Customer Protection Division, has determined thatfor the first five-year period the proposed rule is in effect, therewill be no fiscal implications for the state or for units of local gov-ernment under Texas Government Code §2001.024(a)(4) as aresult of enforcing or administering the sections.Public BenefitsMr. Crouch has also determined that for each year of the firstfive years the proposed rules and amendments are in effect, theanticipated public benefits expected as a result of the adoption ofthe proposed rules and amendments will be increased customerawareness of potential impacts to their electric bills, increasedcustomer protections for the products they are enrolling in, andincreased knowledge of availability of critical care and criticalload designations. Mr. Crouch does not believe there will beany major economic costs to persons required to comply withthe rule under Texas Government Code §2001.024(a)(5).Local Employment Impact StatementFor each year of the first five years the proposed section is ineffect, there should be no effect on a local economy; therefore,no local employment impact statement is required under TexasGovernment Code §2001.022.Costs to Regulated PersonsTexas Government Code §2001.0045(b) does not apply to thisrulemaking because the commission is expressly excluded un-der subsection §2001.0045(c)(7).Public HearingThe commission staff will conduct a public hearing on thisrulemaking on September 14, 2021, at 9:30 a.m. in theCommissioners' Hearing Room, 7th floor, William B. TravisBuilding if requested in accordance with Texas GovernmentCode §2001.029. The request for a public hearing must bereceived by September 7, 2021. If no request for public hearingis received and the commission staff cancels the hearing, it willfile in this project a notification of the cancellation of the hearingprior to the scheduled date for the hearing.Public CommentsInterested persons may file comments electronically through theinterchange on the commission's website. Comments must befiled by August 27, 2021. Reply comments must be filed bySeptember 7, 2021. Comments should be organized in a man-ner consistent with the organization of the proposed rules. Thecommission invites specific comments regarding the costs as-sociated with, and benefits that will be gained by, implemen-tation of the proposed rule. The commission will consider thecosts and benefits in deciding whether to modify the proposedrules on adoption. Commission staff strongly encouragescommenters to include a bulleted executive summary to as-sist Commission Staff in reviewing the filed comments in atimely fashion. All comments should refer to Project Number51830.SUBCHAPTER B. CUSTOMER SERVICE ANDPROTECTION16 TAC §25.43Statutory Authority

These new rules are proposed under the following provision ofPURA: §14.001, which provides the commission the generalpower to regulate and supervise the business of each publicutility within its jurisdiction and to do anything specifically des-ignated or implied by PURA that is necessary and convenientto the exercise of that power and jurisdiction; §14.002, whichprovides the commission with the authority to make and enforcerules reasonably required in the exercise of its powers andjurisdiction; §17.003, which requires electric utilities and retailelectric providers to provide clear and uniform informationabout rates, terms, services, involuntary load shed procedures,critical designations, and procedures for applying for criticaldesignations; §17.102, which directs the commission to adoptand enforce rules requiring that charges on an electric serviceprovider's bill be clearly and easily identified, §39.101, which re-quires the commission to ensure that retail customer protectionsare established that entitle a customer to safe, reliable, and rea-sonably priced electricity, and other protections; §39.106, whichrequires that the commission designate providers of last resort;§39.107(g), which prohibits metered electric service being soldto residential customers on a prepaid basis at a price that ishigher than the price charged by the POLR, §39.110, which pro-hibits the offering of wholesale indexed products to residentialor small commercial customers and placed conditions on theenrollment of other customers in wholesale indexed products;§39.112, which requires a REP to provide certain information toa residential customer who has a fixed rate product.Cross reference to statutes: Public Utility Regulatory Act§§14.001, 14.002, 17.003, 17.102, 39.101, 39.106, 39.107(g),39.110, and 39.112.§25.43. Provider of Last Resort (POLR).

(a) Purpose. This [The purpose of this] section [is to]establishes [establish] the requirements for Provider of Last Resort(POLR) service and ensures [ensure] that it is available to any re-questing retail customer and any retail customer who is transferredto another retail electric provider (REP) by the Electric ReliabilityCouncil of Texas (ERCOT) because the customer's REP failed toprovide service to the customer or failed to meet its obligations to theindependent organization.

(b) Application. The provisions of this section relating to theselection of REPs providing POLR service apply to all REPs that areserving retail customers in transmission and distribution utility (TDU)service areas. This section does not apply when an electric cooperativeor a municipally owned utility (MOU) designates a POLR provider forits certificated service area. However, this section is applicable when anelectric cooperative delegates its authority to the commission in accor-dance with subsection (r) of this section to select a POLR provider forthe electric cooperative's service area. All filings made with the com-mission pursuant to this section, including filings subject to a claimof confidentiality, must [shall] be filed with the commission's FilingClerk in accordance with the commission's Procedural Rules, Chapter22, Subchapter E, of this title (relating to Pleadings and other Docu-ments).

(c) Definitions. The following [words and] terms when usedin this section [shall] have the following meanings [meaning], unlessthe context indicates otherwise:

(1) Affiliate -- As defined in §25.107 of this title (relatingto Certification of Retail Electric Providers (REPs).

(2) Basic firm service -- Electric service that is not sub-ject to interruption for economic reasons and that does not includevalue-added options offered in the competitive market. Basic firm ser-


vice excludes, among other competitively offered options, emergencyor back-up service, and stand-by service. For purposes of this defi-nition, the phrase "interruption for economic reasons" does not meandisconnection for non-payment.

(3) Billing cycle -- A period bounded by a start date andstop date that REPs and TDUs use to determine when a customer usedelectric service.

(4) Billing month -- Generally a calendar accounting pe-riod (approximately 30 days) for recording revenue, which may ormay not coincide with the period a customer's consumption is recordedthrough the customer's meter.

(5) Business day -- As defined by the ERCOT Protocols.

(6) Large non-residential customer -- A non-residentialcustomer who had a peak demand in the previous 12-month period ator above one megawatt (MW).

(7) Large service provider (LSP) -- A REP that is desig-nated to provide POLR service pursuant to subsection (j) of this sec-tion.

(8) Market-based product--A month-to-month product thatis either offered to or matches the rate of a product offered to non-POLR customers of the REP for the same TDU territory and customerclass. A month-to-month contract may not contain a termination fee orpenalty. For purposes of this section, a rate for residential customersthat is derived by applying a positive or negative multiplier to the ratedescribed in subsection (m)(2) of this section is not a market-basedproduct.

(9) Mass transition -- The transfer of customers as repre-sented by ESI IDs from a REP to one or more POLR providers pursuantto a transaction initiated by the independent organization that carriesthe mass transition (TS) code or other code designated by the indepen-dent organization.

(10) Medium non-residential customer -- A non-residentialretail customer who had a peak demand in the previous 12-month pe-riod of 50 kilowatt (kW) or greater, but less than 1,000 kW.

(11) POLR area -- The service area of a TDU in an areawhere customer choice is in effect.

(12) POLR provider -- A volunteer retail electric provider(VREP) or LSP that may be required to provide POLR service pursuantto this section.

(13) Residential customer -- A retail customer classified asresidential by the applicable TDU tariff or, in the absence of classi-fication under a tariff, a retail customer who purchases electricity forpersonal, family, or household purposes.

(14) Transitioned customer -- A customer as representedby ESI IDs that is served by a POLR provider as a result of a masstransition under this section.

(15) Small non-residential customer -- A non-residentialretail customer who had a peak demand in the previous 12-month pe-riod of less than 50 kW.

(16) Voluntary retail electric provider (VREP) -- A REPthat has volunteered to provide POLR service pursuant to subsection(i) of this section.

(d) POLR service.

(1) There are two types of POLR providers: VREPs andLSPs.

(2) For the purpose of POLR service, there are four classesof customers: residential, small non-residential, medium non-residen-tial, and large non-residential.

(3) A VREP or LSP may be designated to serve any or allof the four customer classes in a POLR area.

(4) A POLR provider must [shall] offer a basic, standardretail service package to customers it is designated to serve, which is[shall be] limited to:

(A) Basic firm service; and

(B) Call center facilities available for customer in-quiries.

(5) A POLR provider must [shall], in accordance with§25.108 of this title (relating to Financial Standards for Retail ElectricProviders Regarding the Billing and Collection of Transition Charges),fulfill billing and collection duties for REPs that have defaulted onpayments to the servicer of transition bonds or to TDUs.

(6) Each LSP's customer billing for residential customerstaking POLR service under a rate prescribed by subsection (m)(2) ofthis section must [shall] contain notice to the customer that other com-petitive products or services may be available from the LSP or anotherREP. The notice must [shall] also include contact information for theLSP, and the Power to Choose website, and must [shall] include a no-tice from the commission in the form of a bill insert or a bill messagewith the header "An Important Message from the Public Utility Com-mission RegardingYour Electric Service" addressingwhy the customerhas been transitioned to an LSP, a description of the purpose and na-ture of POLR service, and explaining that more information on com-petitive markets can be found at www.powertochoose.org, or toll-freeat 1-866-PWR-4-TEX (1-866-797-4839).

(e) Standards of service.

(1) An LSP designated to serve a class in a given POLRarea must [shall] serve any eligible customer requesting POLR serviceor assigned to the LSP pursuant to a mass transition in accordance withthe Standard Terms of Service in subsection (f)(1) of this section forthe provider customer's class. However, in lieu of providing terms ofservice to a transitioned customer under subsection (f) of this sectionand under a rate prescribed by subsection (m)(2) of this section an LSPmay at its discretion serve the customer pursuant to a market-basedmonth-to-month product, provided it serves all transitioned customersin the same class and POLR area pursuant to the product.

(2) A POLR provider must [shall] abide by the applicablecustomer protection rules as provided for under Subchapter R of thischapter (relating to Customer Protection Rules for Retail Electric Ser-vice), except that if there is an inconsistency or conflict between thissection and Subchapter R of this chapter, the provisions of this sec-tion [shall] apply. However, for the medium non-residential customerclass, the customer protection rules as provided for under SubchapterR of this chapter do not apply, except for §25.481 of this title (relat-ing to Unauthorized Charges), §25.485(a)-(b) of this title (relating toCustomer Access and Complaint Handling), and §25.495 of this title(relating to Unauthorized Change of Retail Electric Provider).

(3) An LSP that has received commission approval to des-ignate one of its affiliates to provide POLR service on behalf of theLSP pursuant to subsection (k) of this section must [shall] retain re-sponsibility for the provision of POLR service by the LSP affiliate andremains liable for violations of applicable laws and commission rulesand all financial obligations of the LSP affiliate associated with the pro-visioning of POLR service on its behalf by the LSP affiliate.

(f) Customer information.


(1) The Standard Terms of Service prescribed in subpara-graphs (A)-(D) of this paragraph apply to POLR service provided byan LSP under a rate prescribed by subsection (m)(2) of this section.

(A) Standard Terms of Service, POLR Provider Resi-dential Service:Figure: 16 TAC §25.43(f)(1)(A) (No change.)

(B) Standard Terms of Service, POLR Provider SmallNon-Residential Service:Figure: 16 TAC §25.43(f)(1)(B) (No change.)

(C) Standard Terms of Service, POLR ProviderMedium Non-Residential Service:Figure: 16 TAC §25.43(f)(1)(C) (No change.)

(D) Standard Terms of Service, POLR Provider LargeNon-Residential Service:Figure: 16 TAC §25.43(f)(1)(D) (No change.)

(2) An LSP providing service under a rate prescribed bysubsection (m)(2) of this section must [shall] provide each new cus-tomer the applicable Standard Terms of Service. Such Standard Termsof Service must [shall] be updated as required under §25.475(f) of thistitle (relating to General Retail Electric Provider Requirements andInformation Disclosures to Residential and Small Commercial Cus-tomers).

(g) General description of POLR service provider selectionprocess.

(1) Each REP [All REPs] must [shall] provide informationto the commission in accordance with subsection (h)(1) of this section.Based on this information, the commission's designated representativewill [shall] designate REPs that are eligible to serve as POLR providersin areas of the state in which customer choice is in effect, except that thecommission will [shall] not designate POLR providers in the serviceareas of MOUs or electric cooperatives unless an electric cooperativehas delegated to the commission its authority to designate the POLRprovider, in accordance with subsection (r) of this section.

(2) POLR providersmust [shall] serve two-year terms. Theinitial term for POLR service in areas of the state where retail choiceis not in effect as of the effective date of the rule must [shall] be set atthe time POLR providers are initially selected in such areas.

(h) REP eligibility to serve as a POLR provider. In each even-numbered year, the commission will [shall] determine the eligibilityof certified REPs to serve as POLR providers for a term scheduled tocommence in January of the next year.

(1) Each REP must [All REPs shall] provide informationto the commission necessary to establish its [their] eligibility to serveas a POLR provider for the next term. A REP must [REPs shall] file,by July 10th[,] of each even-numbered year, by service area, informa-tion on the classes of customers it provides [they provide] service to,and for each customer class, the number of ESI IDs the REP serves andthe retail sales in megawatt-hours for the annual period ending March31 of the current year. As part of that filing, a REP may request thatthe commission designate one of its affiliates to provide POLR serviceon its behalf pursuant to subsection (k) of this section in the event thatthe REP is designated as an LSP. The independent organization must[shall] provide to the commission the total number of ESI ID and totalMWh data for each class. Each REP must [All REPs shall] also pro-vide information on its [their] technical capability and financial abilityto provide service to additional customers in a mass transition. Thecommission's determination regarding eligibility of a REP to serve asPOLR provider under the provisions of this section will [shall] not beconsidered confidential information.

(2) Eligibility to be designated as a POLR provider is spe-cific to each POLR area and customer class. A REP is eligible to bedesignated a POLR provider for a particular customer class in a POLRarea, unless:

(A) A proceeding to revoke or suspend the REP's cer-tificate is pending at the commission, the REP's certificate has beensuspended or revoked by the commission, or the REP's certificate isdeemed suspended pursuant to §25.107 of this title (relating to Certifi-cation of Retail Electric Providers (REPs));

(B) The sum of the numeric portion of the REP's per-centage of ESI IDs served and percentage of retail sales by MWhs inthe POLR area, for the particular class, is less than 1.0;

(C) The commission does not reasonably expect theREP to be able to meet the criteria set forth in subparagraph (B) of thisparagraph during the entirety of the term;

(D) On the date of the commencement of the term, theREP or its predecessor will not have served customers in Texas for atleast 18 months;

(E) The REP does not serve the applicable customerclass, or does not have an executed delivery service agreement withthe service area TDU;

(F) The REP is certificated as an Option 2 REP under§25.107 of this title;

(G) The REP's customers are limited to its own affili-ates;

(H) A REP files an affidavit stating that it does not servesmall or medium non-residential customers, except for the low-usagesites of the REP's large non-residential customers, or commonly ownedor franchised affiliates of the REP's large non-residential customers andopts out of eligibility for either, or both of the small or medium non-residential customer classes; or

(I) The REP does not meet minimum financial, techni-cal and managerial qualifications established by the commission under§25.107 of this title.

(3) For each term, the commission will [shall] publish thenames of all [of the] REPs eligible to serve as a POLR provider underthis section for each customer class in each POLR area and will [shall]provide notice to REPs determined to be eligible to serve as a POLRprovider. A REPmay challenge its eligibility determination within fivebusiness days of the notice of eligibility by filing with the commissionadditional documentation that includes the specific data, the specificcalculation, and a specific explanation that clearly illustrate and provethe REP's assertion. Commission staff will [shall] verify the additionaldocumentation and, if accurate, reassess the REP's eligibility. Commis-sion staff will [shall] notify the REP of any change in eligibility statuswithin 10 business days of the receipt of the additional documentation.A REP may then appeal to the commission through a contested case ifthe REP does not agree with the staff determination of eligibility. Thecontested status will not delay the designation of POLR providers.

(4) A standard form may be created by the commission forREPs to use in filing information concerning their eligibility to serveas a POLR provider.

(5) If ERCOT or a TDU has reason to believe that a REPis no longer capable of performing POLR responsibilities, ERCOT orthe TDU must [shall] make a filing with the commission detailing thebasis for its concerns and must [shall] provide a copy of the filing tothe REP that is the subject of the filing. If the filing contains confiden-tial information, ERCOT or the TDU must [shall] file the confidential


information in accordance with §22.71 of this title (relating to Filingof Pleadings, Documents, and Other Materials). Commission staff will[shall] review the filing [ , ] andwill [shall] request that the REP demon-strate that it still meets the qualifications to provide the service. Thecommission staff may initiate a proceeding with the commission to dis-qualify the REP from providing POLR service. No ESI IDs will [shall]be assigned to a POLR provider after the commission staff initiates aproceeding to disqualify the POLR provider, unless the commission byorder confirms the POLR provider's designation.

(i) VREP list. Based on the information provided in accor-dance with this subsection and subsection (h) of this section, the com-mission will [shall] post the names of VREPs on its webpage, includingthe aggregate customer count offered by VREPs. A REP may submit arequest to be a VREP no earlier than June 1, and no later than July 31,of each even-numbered year unless otherwise determined by the execu-tive director. This filing must [shall] include a description of the REP'scapabilities to serve additional customers as well as the REP's currentfinancial condition in enough detail to demonstrate that the REP is ca-pable of absorbing a mass transition of customers without technicallyor financially distressing the REP and the specific information set outin this subsection. The commission's determination regarding eligibil-ity of a REP to serve as a VREP, under the provisions of this section,will [shall] not be considered confidential information.

(1) A VREP must [shall] provide to the commission thename of the REP, the appropriate contact person with current contactinformation, which customer classes the REP is willing to serve withineach POLR area, and the number of ESI IDs the REP is willing to serveby customer class and POLR area in each transition event.

(2) A REP that has met the eligibility requirements of sub-section (h) of this section and provided the additional information setout in this subsection is eligible for designation as a VREP.

(3) Commission staff will [shall] make an initial determi-nation of the REPs that are to serve as a VREP for each customer classin each POLR area and publish their names. A REP may challengeits eligibility determination within five business days of the notice ofeligibility by submitting to commission staff additional evidence of itscapability to serve as aVREP. Commission staff will [shall] reassess theREP's eligibility and notify the REP of any change in eligibility statuswithin 10 business days of the receipt of the additional documentation.A REP may then appeal to the commission through a contested case ifthe REP does not agree with the staff determination of eligibility. Thecontested status will not delay the designation of VREPs.

(4) A VREP may file a request at any time to be removedfrom the VREP list or to modify the number of ESI IDs that it is will-ing to serve as a VREP. If the request is to increase the number of ESIIDs, it must [shall] provide information to demonstrate that it is capa-ble of serving the additional ESI IDs, and the commission staff will[shall] make an initial determination, which is subject to an appeal tothe commission, in accordance with the timelines specified in para-graph (3) of this subsection. If the request is to decrease the numberof ESI IDs, the request must [shall] be effective five calendar days af-ter the request is filed with the commission; however, after the requestbecomes effective the VREP must [shall] continue to serve ESI IDspreviously acquired through a mass transition event as well as ESI IDsthe VREP acquires from a mass transition event that occurs during thefive-day notice period. If in a mass transition a VREP is able to acquiremore customers than it originally volunteered to serve, the VREP maywork with commission staff and ERCOT to increase its designation.Changes approved by commission staff will [shall] be communicatedto ERCOT and must [shall] be implemented for the current allocationif possible.

(5) ERCOT or a TDU may challenge a VREP's eligibility.If ERCOT or a TDU has reason to believe that a REP is no longer ca-pable of performing VREP responsibilities, ERCOT or the TDU must[shall] make a filing with the commission detailing the basis for itsconcerns and must [shall] provide a copy of the filing to the REP thatis the subject of the filing. If the filing contains confidential informa-tion, ERCOT or the TDU must [shall] file it in accordance with §25.71of this title (relating to General Procedures, Requirements and Penal-ties). Commission staff will [shall] review the filing of ERCOT andif commission staff concludes that the REP should no longer provideVREP service, it will [shall] request that the REP demonstrate that itstill meets the qualifications to provide the service. The commissionstaff may initiate a proceeding with the commission to disqualify theREP from providingVREP service. No ESI IDswill [shall] be assignedto a VREP after the commission staff initiates a proceeding to disqual-ify the VREP, unless the commission by order confirms the VREP'sdesignation.

(j) LSPs. This subsection governs the selection and service ofREPs as LSPs.

(1) The REPs eligible to serve as LSPs must [shall] be de-termined based on the information provided by REPs in accordancewith subsection (h) of this section. However, for new TDU service ar-eas that are transitioned to competition, the transition to competitionplan approved by the commission may govern the selection of LSPs toserve as POLR providers.

(2) In each POLR area, for each customer class, the com-mission will [shall] designate up to 15 LSPs. The eligible REPs thathave the greatest market share based upon retail sales in megawatt-hours, by customer class and POLR area must [shall] be designated asLSPs. Commission staff will [shall] designate the LSPs by October15th of each even-numbered year, based upon the data submitted tothe commission under subsection (h) of this section. Designation as aVREP does not affect a REP's eligibility to also serve as an LSP.

(3) For the purpose of calculating the POLR rate for eachcustomer class in each POLR area, an EFL must [shall] be completedby the LSP that has the greatest market share in accordance with para-graph (2) of this subsection. The Electricity Facts Label (EFL) must[shall] be supplied to commission staff electronically for placement onthe commission webpage by January 1 of each year, and more often ifthere are changes to the non-bypassable charges. Where REP-specificinformation is required to be inserted in the EFL, the LSP supplyingthe EFL must [shall] note that such information is REP-specific.

(4) An LSP serving transitioned residential and smallnon-residential customers under a rate prescribed by subsection (m)(2)of this section must [shall] move such customers to a market-basedmonth-to-month product, with pricing for such product to be effectiveno later than either the 61st day of service by the LSP or beginningwith the customer's next billing cycle date following the 60th day ofservice by the LSP. For each transition event, all such transitionedcustomers in the same class and POLR area must be served pursuantto the same product terms, except for those customers specified insubparagraph (B) of this paragraph.

(A) The notice required by §25.475(d) of this title toinform the customers of the change to a market-based month-to-monthproduct may be included with the notice required by subsection (t)(3)of this section or may be provided 14 days in advance of the change. Ifthe §25.475(d) notice is included with the notice required by subsection(t)(3) of this section, the LSP may state that either or both the termsof service document and EFL for the market-based month-to-monthproduct will [shall] be provided at a later time, but no later than 14days before their effective date.


(B) The LSP is not required to transfer to a market-based product any transitioned customer who is delinquent in paymentof any charges for POLR service to such LSP as of the 60th day of ser-vice. If such a customer becomes current in payments to the LSP, theLSPmust [shall] move the customer to amarket-basedmonth-to-monthproduct as described in this paragraph on the next billing cycle that oc-curs five business days after the customer becomes current. If the LSPdoes not plan to move customers who are delinquent in payment ofany charges for POLR service as of the 60th day of service to a mar-ket-based month-to-month product, the LSP must [shall] inform thecustomer of that potential outcome in the notice provided to complywith §25.475(d) of this title.

(5) Upon a request from an LSP and a showing that the LSPwill be unable to maintain its financial integrity if additional customersare transferred to it under this section, the commission may relieve anLSP from a transfer of additional customers. The LSPmust [shall] con-tinue providing continuous service until the commission issues an orderrelieving it of this responsibility. In the event the requesting LSP is re-lieved of its responsibility, the commission staff designee will [shall],with 90 days' notice, designate the next eligible REP, if any, as an LSP,based upon the criteria in this subsection.

(k) Designation of an LSP affiliate to provide POLR serviceon behalf of an LSP.

(1) An LSP may request the commission designate an LSPaffiliate to provide POLR service on behalf of the LSP either with theLSP's filing under subsection (h) of this section or as a separate filingin the current term project. The filing must [shall] be made at least 30days prior to the date when the LSP affiliate is to begin providing POLRservice on behalf of the LSP. To be eligible to provide POLR service onbehalf of an LSP, the LSP affiliate must be certificated to provide retailelectric service; have an executed delivery service agreement with theservice area TDU; and meet the requirements of subsection (h)(2) ofthis section, with the exception of subsection (h)(2)(B), (C), (D), and(E) of this section as related to serving customers in the applicablecustomer class.

(2) The request must [shall] include the name and certifi-cate number of the LSP affiliate, information demonstrating the affili-ation between the LSP and the LSP affiliate, and a certified agreementfrom an officer of the LSP affiliate stating that the LSP affiliate agreesto provide POLR service on behalf of the LSP. The request must [shall]also include an affidavit from an officer of the LSP stating that the LSPwill be responsible and indemnify any affected parties for all finan-cial obligations of the LSP affiliate associated with the provisioning ofPOLR service on behalf of the LSP in the event that the LSP affiliatedefaults or otherwise does not fulfill such financial obligations.

(3) Commission staff will [shall] make an initial determi-nation of the eligibility of the LSP affiliate to provide POLR serviceon behalf of an LSP and publish their names. The LSP or LSP affiliatemay challenge commission staff's eligibility determination within fivebusiness days of the notice of eligibility by submitting to commissionstaff additional evidence of its capability to provide POLR service onbehalf of the LSP. Commission staff will [shall] reassess the LSP af-filiate's eligibility and notify the LSP and LSP affiliate of any changein eligibility status within 10 business days of the receipt of the addi-tional documentation. If the LSP or LSP affiliate does not agree withstaff's determination of eligibility, either or both may then appeal thedetermination to the commission through a contested case. The LSPmust [shall] provide POLR service during the pendency of the con-tested case.

(4) ERCOT or a TDU may challenge an LSP affiliate's el-igibility to provide POLR service on behalf of an LSP. If ERCOT or

a TDU has reason to believe that an LSP affiliate is not eligible or isnot performing POLR responsibilities on behalf of an LSP, ERCOT orthe TDU must [shall] make a filing with the commission detailing thebasis for its concerns and must [shall] provide a copy of the filing tothe LSP and the LSP affiliate that are the subject of the filing. If the fil-ing contains confidential information, ERCOT or the TDUmust [shall]file it in accordance with §25.71 of this title (relating to General Proce-dures, Requirements and Penalties). Commission staff will [shall] re-view the filing and if commission staff concludes that the LSP affiliateshould not be allowed to provide POLR service on behalf of the LSP,it will [shall] request that the LSP affiliate demonstrate that it has thecapability. The commission staff will [shall] review the LSP affiliate'sfiling and may initiate a proceeding with the commission to disqualifythe LSP affiliate from providing POLR service. The LSP affiliate maycontinue providing POLR service to ESI IDs currently receiving theservice during the pendency of the proceeding; however, the LSP must[shall] immediately assume responsibility to provide service under thissection to customers who request POLR service, or are transferred toPOLR service through a mass transition, during the pendency of theproceeding.

(5) Designation of an affiliate to provide POLR service onbehalf of an LSP must [shall] not change the number of ESI IDs servedor the retail sales in megawatt-hours for the LSP for the reporting pe-riod nor does such designation relieve the LSP of its POLR serviceobligations in the event that the LSP affiliate fails to provide POLRservice in accordance with the commission rules.

(6) The designated LSP affiliate must [shall] providePOLR service and all reports as required by the commission's rules onbehalf of the LSP.

(7) The methodology used by a designated LSP affiliate tocalculate POLR rates must [shall] be consistent with the methodologyused to calculate LSP POLR rates in subsection (m) of this section.

(8) If an LSP affiliate designated to provide POLR serviceon behalf of an LSP cannot meet or fails to meet the POLR servicerequirements in applicable laws and Commission rules, the LSP must[shall] provide POLR service to any ESI IDs currently receiving theservice from the LSP affiliate and to ESI IDs in a future mass transitionor upon customer request.

(9) An LSP may elect to reassume provisioning of POLRservice from the LSP affiliate by filing a reversion notice with the com-mission and notifying ERCOT at least 30 days in advance.

(l) Mass transition of customers to POLR providers. Thetransfer of customers to POLR providers must [shall] be consistentwith this subsection.

(1) ERCOTmust [shall] first transfer customers to VREPs,up to the number of ESI IDs that each VREP has offered to serve foreach customer class in the POLR area. ERCOT must [shall] use theVREP list to assign ESI IDs to the VREPs in a non-discriminatorymanner, before assigning customers to the LSPs. A VREP must [shall]not be assigned more ESI IDs than it has indicated it is willing to servepursuant to subsection (i) of this section. To ensure non-discriminatoryassignment of ESI IDs to the VREPs, ERCOT must [shall]:

(A) Sort ESI IDs by POLR area;

(B) Sort ESI IDs by customer class;

(C) Sort ESI IDs numerically;

(D) Sort VREPs numerically by randomly generatednumber; and


(E) Assign ESI IDs in numerical order to VREPs, in theorder determined in subparagraph (D) of this paragraph, in accordancewith the number of ESI IDs each VREP indicated a willingness to servepursuant to subsection (i) of this section. If the number of ESI IDs isless than the total that the VREPs indicated that they are willing toserve, each VREP must [shall] be assigned a proportionate number ofESI IDs, as calculated by dividing the number that each VREP indi-cated it was willing to serve by the total that all VREPs indicated theywere willing to serve, multiplying the result by the total number of ESIIDs being transferred to the VREPs, and rounding to a whole number.

(2) If the number of ESI IDs exceeds the amount theVREPs are designated to serve, ERCOT must [shall] assign remainingESI IDs to LSPs in a non-discriminatory fashion, in accordancewith their percentage of market share based upon retail sales inmegawatt-hours, on a random basis within a class and POLR area,except that a VREP that is also an LSP that volunteers to serve at least1% of its market share for a class of customers in a POLR area must[shall] be exempt from the LSP allocation up to 1% of the class andPOLR area. To ensure non-discriminatory assignment of ESI IDs tothe LSPs, ERCOT must [shall]:

(A) Sort the ESI IDs in excess of the allocation toVREPs, by POLR area;

(B) Sort ESI IDs in excess of the allocation to VREPs,by customer class;

(C) Sort ESI IDs in excess of the allocation to VREPs,numerically;

(D) Sort LSPs, except LSPs that volunteered to serve1% of their market share as a VREP, numerically by MWhs served;

(E) Assign ESI IDs that represent no more than 1% ofthe total market for that POLR area and customer class less the ESI IDsassigned to VREPs that volunteered to serve at least 1% of their marketshare for each POLR area and customer class in numerical order toLSPs designated in subparagraph (D) of this paragraph, in proportionto the percentage of MWhs served by each LSP to the total MWhsserved by all LSPs;

(F) Sort LSPs, including any LSPs previously excludedunder subparagraph (D) of this paragraph; and

(G) Assign all remaining ESI IDs in numerical order toLSPs in proportion to the percentage of MWhs served by each LSP tothe total MWhs served by all LSPs.

(3) Each mass transition must [shall] be treated as a sepa-rate event.

(m) Rates applicable to POLR service.

(1) A VREP must [shall] provide service to customers us-ing a market-based, month-to-month product. The VREP must [shall]use the same market-based, month-to-month product for all customersin a mass transition that are in the same class and POLR area.

(2) Subparagraphs (A)-(C) of this paragraph establish themaximum rate for POLR service charged by an LSP. An LSP maycharge a rate less than the maximum rate if it charges the lower rate toall customers in a mass transition that are in the same class and POLRarea.

(A) Residential customers. The LSP rate for the res-idential customer class must [shall] be determined by the followingformula: LSP rate (in $ per kWh) = (Non-bypassable charges + LSPcustomer charge + LSP energy charge) / kWh used Where:

(i) Non-bypassable charges must [shall] be all TDUcharges and credits for the appropriate customer class in the applicableservice territory and other charges including ERCOT administrativecharges, nodal fees or surcharges, reliability unit commitment (RUC)capacity short charges attributable to LSP load, and applicable taxesfrom various taxing or regulatory authorities, multiplied by the level ofkWh and kW used, where appropriate.

(ii) LSP customer charge must [shall] be $0.06 perkWh.

(iii) LSP energy charge must be the average of theactual Real-Time Settlement Point Prices (RTSPPs) for the customer'sload zone for the 12-month period ending September 1 of the precedingyear multiplied by the number of kWhs the customer used during thatbilling period and further multiplied by 120%. [LSP energy chargeshall be the sum over the billing period of the actual hourly Real-TimeSettlement Point Prices (RTSPPs) for the customer's load zone that ismultiplied by the number of kWhs the customer used during that hourand that is further multiplied by 120%.]

(iv) "Number of kWhs the customer used" is basedon interval data. ["Actual hourly RTSPP" is an hourly rate based on asimple average of the actual interval RTSPPs over the hour.]

[(v) ] ["Number of kWhs the customer used" isbased either on interval data or on an allocation of the customer's totalactual usage to the hour based on a ratio of the sum of the ERCOTbackcasted profile interval usage data for the customer's profile typeand weather zone over the hour to the total of the ERCOT backcastedprofile interval usage data for the customer's profile type and weatherzone over the customer's entire billing period.]

[(vi) ] [For each billing period, if the sum over thebilling period of the actual hourly RTSPP for a customer multiplied bythe number of kWhs the customer used during that hour falls belowthe simple average of the RTSPPs for the load zone located partiallyor wholly in the customer's TDU service territory that had the high-est simple average price over the 12-month period ending September 1of the preceding year multiplied by the number of kWhs the customerused during the customer's billing period, then the LSP energy chargeshall be the simple average of the RTSPPs for the load zone partiallyor wholly in the customer's TDU service territory that had the highestsimple average over the 12-month period ending September 1 of thepreceding year multiplied by the number of kWhs the customer usedduring the customer's billing period multiplied by 125%. This method-ology shall apply until the commission issues an order suspending ormodifying the operation of the floor after conducting an investigation.]

(B) Small and medium non-residential customers. TheLSP rate for the small and medium non-residential customer classesmust [shall] be determined by the following formula:LSP rate (in $ per kWh) = (Non-bypassable charges + LSP customercharge + LSP demand charge + LSP energy charge) / kWh usedWhere:

(i) Non-bypassable charges must [shall] be all TDUcharges and credits for the appropriate customer class in the applicableservice territory, and other charges including ERCOT administrativecharges, nodal fees or surcharges, RUC capacity short charges attribut-able to LSP load, and applicable taxes from various taxing or regulatoryauthorities, multiplied by the level of kWh and kW used, where appro-priate.

(ii) LSP customer charge must [shall] be $0.025 perkWh.


(iii) LSP demand charge must [shall] be $2.00 perkW, per month, for customers that have a demand meter, and $50.00per month for customers that do not have a demand meter.

(iv) LSP energy charge must be the average of theactual RTSPPs for the customer's load zone for the previous 12-monthperiod ending September 1 of the preceding year multiplied by thenumber of kWhs the customer used during that billing period an fur-ther multiplied by 125%. [LSP energy charge shall be the sum overthe billing period of the actual hourly RTSPPs, for the customer's loadzone that is multiplied by number of kWhs the customer used duringthat hour and that is further multiplied by 125%.]

(v) "Number of kWhs the customer used" is basedon interval data. ["Actual hourly RTSPP" is an hourly rate based on asimple average of the actual interval RTSPPs over the hour.]

[(vi) ] ["Number of kWhs the customer used" isbased either on interval data or on an allocation of the customer's totalactual usage to the hour based on a ratio of the sum of the ERCOTbackcasted profile interval usage data for the customer's profile typeand weather zone over the hour to the total of the ERCOT backcastedprofile interval usage data for the customer's profile type and weatherzone over the customer's entire billing period.]

[(vii) ] [For each billing period, if the sum over thebilling period of the actual hourly RTSPP for a customer multiplied bythe number of kWhs the customer used during that hour falls belowthe simple average of the RTSPPs for the load zone located partiallyor wholly in the customer's TDU service territory that had the highestsimple average over the 12-month period ending September 1 of thepreceding year multiplied by the number of kWhs the customer usedduring the customer's billing period, then the LSP energy charge shallbe the simple average of the RTSPPs for the load zone located partiallyor wholly in the customer's TDU service territory that had the highestsimple average price over the 12-month period ending September 1 ofthe preceding yearmultiplied by the number of kWhs the customer usedduring the customer's billing period multiplied by 125%. This method-ology shall apply until the commission issues an order suspending ormodifying the operation of the floor after conducting an investigation.]

(C) Large non-residential customers. The LSP rate forthe large non-residential customer class must [shall] be determined bythe following formula: LSP rate (in $ per kWh) = (Non-bypassablecharges + LSP customer charge + LSP demand charge + LSP energycharge) / kWh used Where:

(i) Non-bypassable charges must [shall] be all TDUcharges and credits for the appropriate customer class in the applicableservice territory, and other charges including ERCOT administrativecharges, nodal fees or surcharges, RUC capacity short charges attribut-able to LSP load, and applicable taxes from various taxing or regulatoryauthorities, multiplied by the level of kWh and KW used, where appro-priate.

(ii) LSP customer charge must [shall] be $2,897.00per month.

(iii) LSP demand charge must [shall] be $6.00 perkW, per month.

(iv) LSP energy charge must [shall] be the appropri-ate RTSPP, determined on the basis of 15-minute intervals, for the cus-tomer multiplied by 125%, multiplied by the level of kilowatt-hoursused. The energy charge must [shall] have a floor of $7.25 per MWh.

(3) If in response to a complaint or upon its own investi-gation, the commission determines that an LSP failed to charge theappropriate rate prescribed by paragraph (2) of this subsection, and as

a result overcharged its customers, the LSP must [shall] issue refundsto the specific customers who were overcharged.

(4) On a showing of good cause, the commission may per-mit the LSP to adjust the rate prescribed by paragraph (2) of this subsec-tion, if necessary to ensure that the rate is sufficient to allow the LSP torecover its costs of providing service. Notwithstanding any other com-mission rule to the contrary, such rates may be adjusted on an interimbasis for good cause shown and after at least 10 business days' noticeand an opportunity for hearing on the request for interim relief. Anyadjusted rate must [shall] be applicable to all LSPs charging the rateprescribed by paragraph (2) of this subsection to the specific customerclass, within the POLR area that is subject to the adjustment.

(5) For transitioned customers, the customer and demandcharges associated with the rate prescribed by paragraph (3) of thissubsection must [shall] be pro-rated for partial month usage if a largenon-residential customer switches from the LSP to a REP of choice.

(n) Challenges to customer assignments. A POLR provider isnot obligated to serve a customer within a customer class or a POLRarea for which the REP is not designated as a POLR provider, after asuccessful challenge of the customer assignment. A POLR providermust [shall] use the ERCOT market variance resolution tool to chal-lenge a customer class assignment with the TDU. The TDUmust [shall]make the final determination based upon historical usage data and notpremise type. If the customer class assignment is changed and a differ-ent POLR provider for the customer is determined appropriate, the cus-tomer must [shall] then be served by the appropriate POLR provider.Back dated transactions may be used to correct the POLR assignment.

(o) Limitation on liability. A [The] POLR provider must[providers shall] make reasonable provisions to provide service underthis section to any ESI IDs currently receiving the service and to ESIIDs obtained in a future mass transition or served upon customerrequest; however, liabilities not excused by reason of force majeure orotherwise must [shall] be limited to direct, actual damages.

(1) Neither the customer nor the POLR provider must[shall] be liable to the other for consequential, incidental, punitive,exemplary, or indirect damages. These limitations apply withoutregard to the cause of any liability or damage.

(2) In no event will [shall] ERCOT or a POLR provider beliable for damages to any REP, whether under tort, contract or any othertheory of legal liability, for transitioning or attempting to transition acustomer from such REP to the POLR provider to carry out this sec-tion, or for marketing, offering or providing competitive retail electricservice to a customer taking service under this section from the POLRprovider.

(p) REP obligations in a transition of customers to POLR ser-vice.

(1) A customer may initiate service with an LSP by re-questing such service at the rate prescribed by subsection (m)(2) of thissection with any LSP that is designated to serve the requesting cus-tomer's customer class within the requesting customer's service area.An LSP cannot refuse a customer's request to make arrangements forPOLR service, except as otherwise permitted under this title.

(2) The POLR provider is responsible for obtaining re-sources and services needed to serve a customer once it has beennotified that it is serving that customer. The customer is responsiblefor charges for service under this section at the rate in effect at thattime.

(3) If a REP terminates service to a customer, or transitionsa customer to a POLR provider, the REP is financially responsible for


the resources and services used to serve the customer until it notifies theindependent organization of the termination or transition of the serviceand the transfer to the POLR provider is complete.

(4) The POLR provider is financially responsible for allcosts of providing electricity to customers from the time the transfer orinitiation of service is complete until such time as the customer ceasestaking service under this section.

(5) A defaulting REP whose customers are subject to amass transition event must [shall] return the customers' deposits withinseven calendar days of the initiation of the transition.

(6) ERCOTmust [shall] create a single standard file formatand a standard set of customer billing contact data elements that, in theevent of a mass transition, must [shall] be used by the exiting REP andthe POLRs to send and receive customer billing contact information.The process, as developed by ERCOT, must [shall] be tested on a pe-riodic basis. Each REP must [All REPs shall] submit timely, accurate,and complete files, as required by ERCOT in a mass transition event,as well as for periodic testing. The commission will [shall] establisha procedure for the verification of customer information submitted byREPs to ERCOT. ERCOT must [shall] notify the commission if anyREP fails to comply with the reporting requirements in this subsection.

(7) When customers are to be transitioned or assigned to aPOLR provider, the POLR provider may request usage and demanddata, and customer contact information including email, telephonenumber, and address from the appropriate TDU and from ERCOT,once the transition to the POLR provider has been initiated. Customerproprietary information provided to a POLR provider in accordancewith this section must [shall] be treated as confidential and must [shall]only be used for mass transition related purposes.

(8) Information from the TDU and ERCOT to the POLRproviders must [shall] be provided in Texas SET format when TexasSET transactions are available. However, the TDU or ERCOT maysupplement the information to the POLR providers in other formatsto expedite the transition. The transfer of information in accordancewith this section must [shall] not constitute a violation of the customerprotection rules that address confidentiality.

(9) A POLR provider may require a deposit from a cus-tomer that has been transitioned to the POLR provider to continue toserve the customer. Despite the lack of a deposit, the POLR provider isobligated to serve the customer transitioned or assigned to it, beginningon the service initiation date of the transition or assignment, and con-tinuing until such time as any disconnection request is effectuated bythe TDU. A POLR provider may make the request for deposit beforeit begins serving the customer, but the POLR provider must [shall] be-gin providing service to the customer even if the service initiation dateis before it receives the deposit - if any deposit is required. A POLRprovider must [shall] not disconnect the customer until the appropriatetime period to submit the deposit has elapsed. For the large non-res-idential customer class, a POLR provider may require a deposit to beprovided in three calendar days. For the residential customer class, thePOLR provider may require a deposit to be provided after 15 calen-dar days of service if the customer received 10 days' notice that a de-posit was required. For all other customer classes, the POLR providermay require a deposit to be provided in 10 calendar days. The POLRprovider may waive the deposit requirement at the customer's requestif deposits are waived in a non-discriminatory fashion. If the POLRprovider obtains sufficient data, it must [shall] determine whether a res-idential customer has satisfactory credit based on the criteria the POLRprovider routinely applies to its other residential customers. If the cus-tomer has satisfactory credit, the POLR provider must [shall] not re-quest a deposit from the residential customer.

(A) At the time of a mass transition, the Executive Di-rector or staff designated by the Executive Director will [shall] distrib-ute available proceeds from an irrevocable stand-by letter of credit inaccordance with the priorities established in §25.107(f)(6) of this ti-tle. For a REP that has obtained a current list from the Low IncomeList Administrator (LILA) that identifies low-income customers, thesefunds must [shall] first be used to provide deposit payment assistancefor that REP's transitioned low-income customers. The Executive Di-rector or staff designee will [shall], at the time of a transition event,determine the reasonable deposit amount up to $400 per customer ESIID, unless good cause exists to increase the level of the reasonable de-posit amount above $400. Such reasonable deposit amount may takeinto account factors such as typical residential usage and current retailresidential prices, and, if fully funded, must [shall] satisfy in full thecustomers' initial deposit obligation to the VREP or LSP.

(B) For a REP that has obtained a current list from theLILA that identifies low-income customers, the Executive Director orthe staff designee will [shall] distribute available proceeds pursuant to§25.107(f)(6) of this title to the VREPs proportionate to the number ofcustomers they received in the mass transition, who at the time of themass transition were identified as low-income customers by the currentLILA list, up to the reasonable deposit amount set by the Executive Di-rector or staff designee. If funds remain available after distribution tothe VREPs, the remaining funds must [shall] be distributed to the ap-propriate LSPs by dividing the amount remaining by the number oflow income customers as identified in the LILA list that are allocatedto LSPs, up to the reasonable deposit amount set by the Executive Di-rector or staff designee.

(C) If the funds distributed in accordance with§25.107(f)(6) of this title do not equal the reasonable deposit amountdetermined, the VREP and LSP may request from the customerpayment of the difference between the reasonable deposit amountand the amount distributed. Such difference must [shall] be collectedin accordance with §25.478(e)(3) of this title (relating to CreditRequirements and Deposits).

(D) Notwithstanding §25.478(d) of this title, 90 daysafter the transition date, the VREP or LSP may request payment ofan amount that results in the total deposit held being equal to what theVREP or LSP would otherwise have charged a customer in the samecustomer class and service area in accordance with §25.478(e) of thistitle, at the time of the transition.

(10) On the occurrence of one or more of the followingevents, ERCOT must [shall] initiate a mass transition to POLRproviders[,] of all of the customers served by a REP:

(A) Termination of the Load Serving Entity (LSE) orQualified Scheduling Entity (QSE) Agreement for a REPwith ERCOT;

(B) Issuance of a commission order recognizing that aREP is in default under the TDU Tariff for Retail Delivery Service;

(C) Issuance of a commission order de-certifying aREP;

(D) Issuance of a commission order requiring a masstransition to POLR providers;

(E) Issuance of a judicial order requiring a mass transi-tion to POLR providers; and

(F) At the request of a REP, for the mass transition ofall of that REP's customers.

(11) A REPmust [shall] not use the mass transition processin this section as a means to cease providing service to some cus-


tomers[,] while retaining other customers. A REP's improper use ofthe mass transition process may lead to de-certification of the REP.

(12) ERCOT may provide procedures for the mass transi-tion process, consistent with this section.

(13) A mass transition under this section must [shall] notoverride or supersede a switch request made by a customer to switchan ESI ID to a new REP of choice, if the request was made before amass transition is initiated. If a switch request has been made but isscheduled for any date after the next available switch date, the switchmust [shall] be made on the next available switch date.

(14) ERCOTmust identify customers [Customers] who aremass transitioned [shall be identified] for a period of 60 calendar days.The identification must [shall] terminate at the first completed switchor at the end of the 60-day period, whichever is first. If necessary, ER-COT system changes or new transactions must [shall] be implementedno later than 14 months from the effective date of this section to com-municate that a customer was acquired in a mass transition and is notcharged the out-of-cycle meter read pursuant to paragraph (16) of thissubsection. To the extent possible, the systems changes should be de-signed to ensure that the 60-day period following a mass transition,when a customer switches away from a POLR provider, the switchtransaction is processed as an unprotected, out-of-cycle switch, regard-less of how the switch was submitted.

(15) In the event of a transition to a POLR provider or awayfrom a POLR provider to a REP of choice, the switch notification no-tice detailed in §25.474(l) of this title (relating to Selection of RetailElectric Provider) is not required.

(16) In a mass transition event, the ERCOT initiated trans-actions must [shall] request an out-of-cycle meter read for the associ-ated ESI IDs for a date two calendar days after the calendar date ER-COT initiates such transactions to the TDU. If an ESI ID does not havethe capability to be read in a fashion other than a physical meter read,the out-of-cycle meter read may be estimated. An estimated meter readfor the purpose of a mass transition to a POLR provider must [shall] notbe considered a break in a series of consecutive months of estimates,but must [shall] not be considered a month in a series of consecutive es-timates performed by the TDU. A TDUmust [shall] create a regulatoryasset for the TDU fees associated with a mass transition of customersto a POLR provider pursuant to this subsection. Upon review of rea-sonableness and necessity, a reasonable level of amortization of suchregulatory asset must [shall] be included as a recoverable cost in theTDU's rates in its next rate case or such other rate recovery proceedingas deemed necessary. The TDU must [shall] not bill, as a discretionarycharge, the costs included in this regulatory asset, which must [shall]consist of the following:

(A) fees for out-of-cycle meter reads associated withthe mass transition of customers to a POLR provider; and

(B) fees for the first out-of-cycle meter read provided toa customer who transfers away from a POLR provider, when the out-of-cycle meter read is performed within 60 calendar days of the dateof the mass transition and the customer is identified as a transitionedcustomer.

(17) In the event the TDU estimates a meter read for thepurpose of a mass transition, the TDU must [shall] perform a true-upevaluation of each ESI ID after an actual meter reading is obtained.Within 10 days after the actual meter reading is obtained, the TDUmust [shall] calculate the actual average kWh usage per day for the timeperiod from the most previous actual meter reading occurring prior tothe estimate for the purpose of a mass transition to the most currentactual meter reading occurring after the estimate for the purpose of

mass transition. If the average daily estimated usage sent to the exitingREP is more than 50% greater than or less than the average actual kWhusage per day, the TDU must [shall] promptly cancel and re-bill boththe exiting REP and the POLR using the average actually daily usage.

(q) Termination of POLR service provider status.

(1) The commission may revoke a REP's POLR status afternotice and opportunity for hearing:

(A) If the POLR provider fails to maintain REP certifi-cation;

(B) If the POLR provider fails to provide service in amanner consistent with this section;

(C) The POLR provider fails to maintain appropriate fi-nancial qualifications; or

(D) For other good cause.

(2) If an LSP defaults or has its status revoked before theend of its term, after a review of the eligibility criteria, the commissionstaff designee will [shall], as soon as practicable, designate the nexteligible REP, if any, as an LSP, based on the criteria in subsection (j)of this section.

(3) At the end of the POLR service term, the outgoing LSPmust [shall] continue to serve customers who have not selected anotherREP.

(r) Electric cooperative delegation of authority. An electric co-operative that has adopted customer choice may select to delegate tothe commission its authority to select POLR providers under PURA§41.053(c) in its certificated service area in accordance with this sec-tion. After notice and opportunity for comment, the commission will[shall], at its option, accept or reject such delegation of authority. Ifthe commission accepts the delegation of authority, the following con-ditions [shall] apply:

(1) The board of directors must [shall] provide the commis-sion with a copy of a board resolution authorizing such delegation ofauthority;

(2) The delegation of authoritymust [shall] bemade at least30 calendar days prior to the time the commission issues a publicationof notice of eligibility;

(3) The delegation of authority must [shall] be for a mini-mum period corresponding to the period for which the solicitation must[shall] be made;

(4) The electric cooperative wishing to delegate its author-ity to designate a [an] continuous provider must [shall] also provide thecommission with the authority to apply the selection criteria and proce-dures described in this section in selecting the POLR providers withinthe electric cooperative's certificated service area; and

(5) If there are no competitive REPs offering service in theelectric cooperative certificated area, the commission must [shall] au-tomatically reject the delegation of authority.

(s) Reporting requirements. Each LSP that serves customersunder a rate prescribed by subsection (m)(2) of this section must [shall]file the following information with the commission on a quarterly basisbeginning January of each year in a project established by the commis-sion for the receipt of such information. Each quarterly report must[shall] be filed within 30 calendar days of the end of the quarter.

(1) For each month of the reporting quarter, each LSP must[shall] report the total number of new customers acquired by the LSP


under this section and the following information regarding these cus-tomers:

(A) The number of customers fromwhom a deposit wasrequested pursuant to the provisions of §25.478 of this title, and theaverage amount of deposit requested;

(B) The number of customers fromwhom a deposit wasreceived, including those who entered into deferred payment plans forthe deposit, and the average amount of the deposit;

(C) The number of customers whose service was phys-ically disconnected pursuant to the provisions of §25.483 of this title(relating to Disconnection of Service) for failure to pay a required de-posit; and

(D) Any explanatory data or narrative necessary to ac-count for customers that were not included in either subparagraph (B)or (C) of this paragraph.

(2) For each month of the reporting quarter each LSP must[shall] report the total number of customers to whom a disconnectionnotice was issued pursuant to the provisions of §25.483 of this title andthe following information regarding those customers:

(A) The number of customers who entered into a de-ferred payment plan, as defined by §25.480(j) of this title (relating toBill Payment and Adjustments) with the LSP;

(B) The number of customers whose service was phys-ically disconnected pursuant to §25.483 of this title;

(C) The average amount owed to the LSP by each dis-connected customer at the time of disconnection; and

(D) Any explanatory data or narrative necessary to ac-count for customers that are not included in either subparagraph (A) or(B) of this paragraph.

(3) For the entirety of the reporting quarter, each LSP must[shall] report, for each customer that received POLR service, the TDUand customer class associated with the customer's ESI ID, the numberof days the customer received POLR service, and whether the customeris currently the LSP's customer.

(t) Notice of transition to POLR service to customers. Whena customer is moved to POLR service, the customer must [shall] beprovided notice of the transition by ERCOT, the REP transitioning thecustomer, and the POLR provider. The ERCOT notice must [shall]be provided within two days of the time ERCOT and the transitioningREP know that the customer must [shall] be transitioned and customercontact information is available. If ERCOT cannot provide notice tocustomers within two days, it must [shall] provide notice as soon aspracticable. The POLR provider must [shall] provide the notice re-quired by paragraph (3) of this subsection to commission staff at least48 hours before it is provided to customers, and must [shall] providethe notice to transitioning customers as soon as practicable. The POLRprovider must [shall] email the notice to the commission staff membersdesignated for receipt of the notice.

(1) ERCOT notice methods must [shall] include a postcard[post-card], containing the official commission seal with languageand format approved by the commission. ERCOT must [shall] notifytransitioned customers with an automated phone call [phone-call]and email to the extent the information to contact the customer isavailable pursuant to subsection (p)(6) of this section. ERCOT must[shall] study the effectiveness of the notice methods used and reportthe results to the commission.

(2) Notice by the REP from which the customer is trans-ferred must [shall] include:

(A) The reason for the transition;

(B) A contact number for the REP;

(C) A statement that the customer must [shall] receivea separate notice from the POLR provider that must [shall] disclose thedate the POLR provider must [shall] begin serving the customer;

(D) Either the customer's deposit plus accrued interest,or a statement that the deposit must [shall] be returned within sevendays of the transition;

(E) A statement that the customer can leave the as-signed service by choosing a competitive product or service offeredby the POLR provider, or another competitive REP, as well as thefollowing statement: "If you would like to see offers from differentretail electric providers, please access www.powertochoose.org, or calltoll-free 1-866-PWR-4-TEX (1-866-797-4839) for a list of providersin your area;"

(F) For residential customers, notice from the commis-sion in the form of a bill insert or a bill message with the header "An Im-portant Message from the Public Utility Commission Regarding YourElectric Service" addressing why the customer has been transitioned toanother REP, the continuity of service purpose, the option to choose adifferent competitive provider, and information on competitivemarketsto be found at www.powertochoose.org, or toll-free at 1-866-PWR-4-TEX (1-866-797-4839);

(G) If applicable, a description of the activities that theREP must [shall] use to collect any outstanding payments, includingthe use of consumer reporting agencies, debt collection agencies, smallclaims court, and other remedies allowed by law, if the customer doesnot pay or make acceptable payment arrangements with the REP; and

(H) Notice to the customer that after being transitionedto POLR service, the customer may accelerate a switch to another REPby requesting a special or out-of-cycle meter read.

(3) Notice by the POLR provider must [shall] include:

(A) The date the POLR provider began or must [shall]begin serving the customer and a contact number for the POLRprovider;

(B) A description of the POLR provider's rate for ser-vice. In the case of a notice from an LSP that applies the pricing ofsubsection (m)(2) of this section, a statement that the price is generallyhigher than available competitive prices, that the price is unpredictable,and that the exact rate for each billing period must [shall] not be deter-mined until the time the bill is prepared;

(C) The deposit requirements of the POLR provider andany applicable deposit waiver provisions and a statement that, if thecustomer chooses a different competitive product or service offeredby the POLR provider, a REP affiliated with the POLR provider, oranother competitive REP, a deposit may be required;

(D) A statement that the additional competitive prod-ucts or services may be available through the POLR provider, a REPaffiliated with the POLR provider, or another competitive REP, as wellas the following statement: "If you would like to choose a differentretail electric provider, please access www.powertochoose.org, or calltoll-free 1-866-PWR-4-TEX (1-866-797-4839) for a list of providersin your area;"

(E) The applicable Terms of Service and ElectricityFacts Label (EFL); and

(F) For residential customers that are served by an LSPunder a rate prescribed by subsection (m)(2) of this section, a notice


to the customer that after being transitioned to service from a POLRprovider, the customer may accelerate a switch to another REP by re-questing a special or out-of-cycle meter read.

(u) Market notice of transition to POLR service. ERCOTmust[shall] notify all affected Market Participants and the Retail MarketSubcommittee (RMS) email listserv of a mass transition event withinthe same day of an initial mass-transition call after the call has takenplace. The notification must [shall] include the exiting REP's name,total number of ESI IDs, and estimated load.

(v) Disconnection by a POLR provider. The POLR providermust comply with the applicable customer protection rules as providedfor under Subchapter R of this chapter, except as otherwise stated inthis section. To ensure continuity of service, service under this sectionmust [shall] begin when the customer's transition to the POLR provideris complete. A customer deposit is not a prerequisite for the initiation ofservice under this section. Once service has been initiated, a customerdeposit may be required to prevent disconnection. Disconnection forfailure to pay a deposit may not occur until after the proper notice andafter that appropriate payment period detailed in §25.478 of this titlehas elapsed, except where otherwise noted in this section.

(w) Deposit payment assistance.

(1) The commission staff designee will [shall] distributethe deposit payment assistance monies to the appropriate POLRs onbehalf of customers as soon as practicable.

(2) The Executive Director or staff designee will [shall] usebest efforts to provide written notice to the appropriate POLRs of thefollowing on or before the second calendar day after the transition:

(A) a list of the ESI IDs identified by the LILA that havebeen or must [shall] be transitioned to the applicable POLR (if avail-able); and

(B) the amount of deposit payment assistance that must[shall] be provided on behalf of a POLR customer identified by theLILA (if available).

(3) Amounts credited as deposit payment assistance pur-suant to this section must [shall] be refunded to the customer in accor-dance with §25.478(j) of this title.


Filed with the Office of the Secretary of State on August 2, 2021.TRD-202102996Andrea GonzalezRules CoordinatorPublic Utility Commission of TexasEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 936-7244

♦ ♦ ♦SUBCHAPTER R. CUSTOMER PROTECTIONRULES FOR RETAIL ELECTRIC SERVICEPROVIDERS16 TAC §§25.471, 25.475, 25.479, 25.498, 25.499Statutory AuthorityThe new rule and amendments are proposed under Texas Wa-ter Code §13.041(b), which provides the commission with the

authority to make and enforce rules reasonably required in theexercise of its powers and jurisdiction; and §13.305, which es-tablishes a voluntary process for the valuation of utilities or facil-ities acquired by Class A or Class B utilities.Cross reference to statutes: Public Utility Regulatory Act§§14.001, 14.002, 17.003, 17.102, 39.101, 39.106, 39.107(g),39.110, and 39.112.§25.471. General Provisions of Customer Protection Rules.

(a) Application. This subchapter applies to aggregators andretail electric providers (REPs). In addition, where specifically stated,these rules apply to transmission and distribution utilities (TDUs), theregistration agent, brokers and power generation companies. Theserules specify when certain provisions are applicable only to some, butnot all, of these providers.

(1) - (2) (No change.)

(3) The rules in this subchapter are minimum, mandatoryrequirements that must be offered to or complied with for all customersunless otherwise specified. Except for the provisions of §25.495of this title (relating to Unauthorized Change of Retail ElectricProvider), §25.481 of this title (relating to Unauthorized Charges),[and] §25.485(a)-(b) of this title (relating to Customer Access andComplaint Handling), and §25.499 (relating to Acknowledgement ofRisk Requirements for Certain Commercial Contracts), a customerother than a residential or small commercial class customer, or anon-residential customer whose load is part of an aggregation inexcess of 50 kilowatts, may agree to terms of service that reflect eithera higher or lower level of customer protections than would otherwiseapply under these rules. Any agreements containing materially dif-ferent protections from those specified in these rules must be reducedto writing and provided to the customer. Additionally, copies of suchagreements must be provided to the commission upon request.

(4) - (5) (No change.)

(b) - (d) (No change.)

§25.475. General Retail Electric Provider Requirements and Infor-mation Disclosures to Residential and Small Commercial Customers.

(a) Applicability. The requirements of this section apply toretail electric providers (REPs) [and aggregators, when specificallystated,] in connection with the provision of service and marketing toresidential and small commercial customers. When specifically stated,the requirements of this section apply to brokers, aggregators, andtransmission and distribution utilities (TDUs). This section is effectivefor contracts entered into on or after September 1, 2021. [This sectionis effective April 1, 2010.] REPs are not required to modify contractdocuments related to contracts entered into before this date[,] but must[shall] provide notice of expiration as required by subsection (e) ofthis section. Contracts entered into prior to September 1, 2021 mustcomply with the provisions of this section in effect at the time thecontracts were executed.

(b) Definitions. The definitions set forth in §25.5 of this title(relating to Definitions) and §25.471(d) of this title (relating to GeneralProvisions of Customer Protection Rules) apply to this section. In ad-dition, the[The] following words and terms, when used in this section[shall] have the following meanings, unless the context indicates oth-erwise.

(1) Contract -- The Terms of Service document (TOS), theElectricity Facts Label (EFL), Your Rights as a Customer document(YRAC), [and] the documentation of enrollment pursuant to §25.474of this title (relating to Selection of Retail Electric Provider), and, ifapplicable, the Acknowledgement of Risk (AOR).


(2) Contract documents -- The TOS, EFL, [and] YRAC,and, if applicable, the AOR.

(3) Contract expiration -- The time when the initial termcontract is completed. A new contract is initiated when the customerbegins receiving service pursuant to the new EFL.

(4) Contract term -- The time period the contract is in ef-fect.

(5) Fixed rate product -- A retail electric product with aterm of at least three months for which the price (including all recur-ring charges and ancillary service charges) for each billing period ofthe contract term is the same throughout the contract term, except thatthe price may vary from the disclosed amount solely to reflect actualchanges in TDU [the Transmission and Distribution Utility (TDU)]charges, changes to the Electric Reliability Council of Texas (ERCOT)or Texas Regional Entity, Inc. administrative fees charged to loads orchanges resulting from federal, state or local laws that impose new ormodified fees or costs on a REP that are beyond the REP's control.

(6) Indexed product -- A retail electric product for whichthe price, including recurring charges, can vary according to a pre-de-fined pricing formula that is based on publicly available indices or in-formation and is disclosed to the customer, and to reflect actual changesin TDU charges, changes to the ERCOT or Texas Regional Entity,Inc. administrative fees charged to loads or changes resulting fromfederal, state or local laws or regulatory actions that impose new ormodified fees or costs on a REP that are beyond the REPs control. Anindexed product may be for a term of three months or more, or may bea month-to-month contract.

(7) Month-to-month contract -- A contract with a term of31 days or less. A month-to-month contract may not contain a termi-nation fee or penalty.

(8) Price -- The cost for a retail electric product that in-cludes all recurring charges, including the cost of ancillary services,excluding state and local sales taxes, and reimbursement for the statemiscellaneous gross receipts tax.

(9) Recurring charge -- A charge for a retail electric productthat is expected to appear on a customer's bill in every billing periodor appear in three or more billing periods in a twelve month period. Acharge is not considered recurring if it will be billed by the TDU andpassed on to the customer and will either not be applied to all customersof that class within the TDU territory, or cannot be known until thecustomer enrolls or requests a specific service.

(10) Term contract -- A contract with a term in excess of31 days.

(11) Variable price product -- A retail product for whichpricemay vary according to amethod determined by the REP, includinga product for which the price, can increase no more than a definedpercentage as indexed to the customer's previous billing month's price.For residential customers, a variable price product can be only amonth-to-month contract.

(12) Wholesale Indexed Product - A retail electric prod-uct in which the price a customer pays for electricity includes a directpass-through of real-time settlement point prices determined by the in-dependent organization certified under the Public Utility RegulatoryAct (PURA) §39.151 for the ERCOT power region.

(c) General Retail Electric Provider requirements.

(1) General Disclosure Requirements.

(A) All written, electronic, and oral communications,including advertising, websites, direct marketing materials, billing

statements, TOSs, EFLs, YRACs, and, if applicable, AORs [YRACs]distributed by a REP or aggregator must [shall] be clear and not mis-leading, fraudulent, unfair, deceptive, or anti-competitive. Prohibitedcommunications include, but are not limited to:

(i) Using the term or terms "fixed" to market a prod-uct that does not meet the definition of a fixed rate product.

(ii) Suggesting, implying, or otherwise leadingsomeone to believe that a REP or aggregator has been providing retailelectric service prior to the time the REP or aggregator was certifiedor registered by the commission.

(iii) Suggesting, implying or otherwise leadingsomeone to believe that receiving retail electric service from a REPwill provide a customer with better quality of service from the TDU.

(iv) Falsely suggesting, implying or otherwise lead-ing someone to believe that a person is a representative of a TDU orany REP or aggregator.

(v) Falsely suggesting, implying or otherwise lead-ing someone to believe that a contract has benefits for a period of timelonger than the initial contract term.

(B) Written and electronic communicationsmust [shall]not refer to laws, including commission rules without providing a linkor website address where the text of those rules are available. Allprinted advertisements, electronic advertising over the Internet, andwebsites, must [shall] include the REP's certified name or commissionauthorized business name, or the aggregator's registered name, and thenumber of the certification or registration.

(C) The TOS, EFL, [and] YRAC, and, if applicable,AORmust [shall] be provided to each customer upon enrollment. Eachdocument must [shall] be provided to the customer whenever a changeis made to the specific document and upon a customer's request, at anytime free of charge.

(D) A REP must [shall] retain a copy of each version ofthe TOS, EFL, [and] YRAC, and, if applicable, AOR during the timethe plan is in effect for a customer and for four years after the contractceases to be in effect for any customer. REPs must [shall] provide suchdocuments at the request of the commission or its staff.

(2) General contracting requirements.

(A) Each [A] TOS, EFL, YRAC, and, if applicable,AOR must [YRAC shall] be complete, [shall] be written in languagethat is clear, plain and easily understood, and [shall] be printed inparagraphs of no more than 250 words in a font no smaller than10 point. References to laws including commission rules in thesedocuments must [shall] include a link or website [internet] address tothe full text of the applicable law or rule.

(B) Each [All] contract document must [documentsshall] be available to the commission to post on its customer educationwebsite [(]if the REP chooses to post offers to the website[)].

(C) A contract is limited to service to a customer at alocation specified in the contract. If the customer moves from the lo-cation, the customer is under no obligation to continue the contract atanother location. The REPmay require a customer to provide evidencethat it is moving to another location. There must [shall] be no early ter-mination fee assessed to the customer as a result of the customer's relo-cation if the customer provides a forwarding address and, if required,reasonable evidence that the customer no longer occupies the locationspecified in the contract.


(D) A TOS and EFL must [shall] disclose the type ofproduct being described, using one of the following terms: fixed rateproduct, indexed product or a variable price product.

(E) A REP must [shall] not use a credit score, a credithistory, or utility payment data as the basis for determining the pricefor electric service for a product with a contract term of 12 months orless for an existing residential customer or in response to an applicant'srequest to become a residential customer.

(F) In any dispute between a customer and a REP con-cerning the terms of a contract, any vagueness, obscurity, or ambiguityin the contract will be construed in favor of the customer.

(G) For a variable price product, the REP must [shall]disclose on the REP's website and through a toll-free number the cur-rent price and, for residential customers, one year price history, or his-tory for the life of the product, if it has been offered less than one year.A REPmust [shall] not rename a product in order to avoid disclosure ofprice history. The EFL of a variable price product or indexed productmust [shall] include a notice of how the current price and, if applicable,historical price information may be obtained by a customer.

(H) A REP must [shall] comply with its contracts.

(3) Specific contract requirements.

(A) The contract term must [shall] be conspicuouslydisclosed.

(B) The start and end dates of the contract must [shall]be available to the customer upon request. If the REP cannot determinethe start date, the REP may estimate the start date. After the start dateis known, the REP must [shall] specify the end date of the contract by:

(i) specifying a calendar date; or

(ii) referencing [reference to] the first meter read onor after a specific calendar date.

(C) If a REP specifies a calendar date as the end date,the REP may bill the term contract price through the first meter read onor after the end date of the contract.

(D) Each contract for service must include the terms ofthe default renewal product that the customer will be automatically en-rolled in if the customer does not select another retail electric productbefore the expiration of the contract term after the customer has re-ceived all required expiration notices.

(E) If a REP does not provide proper notice of the expi-ration of a fixed rate contract and the customer does not select anotherREP before expiration of the contract term, the REP must continue toserve the customer under the pricing terms of the fixed rate product un-til the REP provides notice in accordance with applicable requirementsof subsection (e)(2)(A)(i) or (ii) of this section or the customer selectsanother retail electric product.

(F) A REP, aggregator, or broker is prohibited from of-fering a wholesale indexed product to a residential or small commercialcustomer.

(G) A REP, aggregator, or broker may enroll a residen-tial or small commercial customer in an indexed product or a productthat contains a separate assessment of ancillary service charges only ifthe REP, aggregator, or broker obtains before the customer's enrollmentan AOR in compliance with the requirements of this section.

(4) Website requirements.

(A) Each REP that offers residential retail electric prod-ucts for enrollment on its website must [shall] prominently display the

EFL for any products offered without a person having to enter any per-sonal information other than zip code and information that allows de-termination of the type of offer the consumer wishes to review. Per-son-specific information must [shall] not be required.

(B) The EFL for each product must [shall] be printablein nomore than a two page format. The EFL, TOS, [and] YRAC, and, ifapplicable, AOR for any products offered for enrollment on the websitemust [shall] be available for viewing or downloading.

(d) Changes in contract and price and notice of changes. AREP may make changes to the terms and conditions of a contract or tothe price of a product as provided for in this section. Changes in term(length) of a contract require the customer to enter into a new contractand may not be made by providing the notice described in paragraph(3) of this subsection.

(1) Contract changes other than price.

(A) A REP may not change the price (other than asallowed by paragraph (2) of this subsection) or contract term of aterm contract for a retail electric product[,] during its term,[;] butmay change any other provision of the contract[,] with notice underparagraph (3) of this subsection.

(B) A REP may not change the terms and conditions ofa month-to-month product, indexed or variable price products, unlessit provides notice under paragraph (3) of this subsection.

(2) Price changes.

(A) A REP may only change the price of a fixed rateproduct, an indexed product, or a variable product consistent with thedefinitions in this section and according to the product's EFL. Suchprice changes do not require notice under paragraph (3) of this subsec-tion.

(B) For a fixed rate product, each bill must [shall] eithershow the price changes on one or more separate line items, or must[shall] include a conspicuous notice stating that the amount billed mayinclude price changes allowed by law or regulatory actions.

(C) Each residential bill for a variable price productmust [shall] include a statement informing the customer how to obtaininformation about the price that will apply on the next bill.

(3) Notice of changes to terms and conditions. A REPmustprovide written notice to its customers at least 14 days in advance ofthe date that the change in the contract will be applied to the customer'sbill or take effect. Notice is not required for a change that benefits thecustomer.

(4) Contents of the notice to change terms and conditions.The notice must [shall]:

(A) be provided in or with the customer's bill or in aseparate document;

(B) include the following statement, "Important noticeregarding changes to your contract" clearly and conspicuously in thenotice;

(C) identify the change and the specific contract provi-sions that address the change;

(D) clearly specify what actions the customer needs totake if the customer does not accept the proposed changes to the con-tract;

(E) state in bold lettering that if the new terms are notacceptable to the customer, the customer may terminate the contractand no termination penalty may [shall] apply for 14 days from the date


that the notice is sent to the customer but may apply if action is takenafter the 14 days have expired. No such statement is required if thecustomer would not be subject to a termination penalty under any cir-cumstances; and

(F) state in bold lettering that establishing service withanother REP may take up to seven business days.

(e) Contract expiration and renewal offers. [The REP shallsend a written notice of contract expiration at least 30 days or onebilling cycle prior to the date of contract expiration, but no more than60 days or two billing cycles in advance of contract expiration for a res-idential customer, and at least 14 days but no more than 60 days or twobilling cycles in advance of contract expiration for a small commercialcustomer. The REP shall send the notice by mail to a residential cus-tomer or shall send the required notice to a customer's e-mail address ifavailable to the REP and if the customer has requested to receive con-tract-related notices electronically. The REP shall send the notice to asmall commercial customer by mail or may send the notice to the cus-tomer's e-mail address if available to the REP and, if the customer hasrequested to receive contract-related notices electronically. Nothing inthis section shall preclude a REP from offering a new contract to thecustomer at any other time during the contract term.]

(1) Notice Timeline for Expiration of a Non-Fixed RateTerm Product. For term products other than fixed rate products, theREP must send a written notice of contract expiration at least 30 daysor one billing cycle prior to the date of contract expiration, but no morethan 60 days or two billing cycles in advance of contract expirationfor a residential customer, and at least 14 days but no more than 60days or two billing cycles in advance of contract expiration for a smallcommercial customer. The REP must send the notice by mail to a resi-dential customer or must send the required notice to a customer's e-mailaddress if available to the REP and if the customer has requested to re-ceive contract-related notices electronically. The REP must send thenotice to a small commercial customer by mail or may send the noticeto the customer's e-mail address if available to the REP and, if the cus-tomer has requested to receive contract-related notices electronically.Nothing in this section precludes a REP from offering a new contractto the customer at any other time during the contract term.

(2) Notice Timeline for Expiration of a Fixed Rate Product.

(A) For fixed rate products, the REP must provide thecustomer with at least three written notices of the date the fixed rateproduct will expire. The notices must be provided during the last thirdof the fixed rate contract period and in intervals that allow for, as prac-ticable, even distribution of the notices throughout the last third of thefixed rate contract period. For fixed rate contracts for a period:

(i) Of more than four months, the final notice mustbe provided at least 30 days before the date the fixed rate contact willexpire.

(ii) Of four or fewer months, the final notice mustbe provided at least 15 days before the date the fixed rate contract willexpire.

(B) The notices must be provided to the customer bymail at the customer's billing address, unless the customer has opted toreceive communications electronically from the REP.

(C) If a REP does not provide the required notice of theexpiration of a customer's fixed rate contract and the customer doesnot select another retail electric product before expiration of the fixedrate contract term, the REP must continue serving the customer underthe terms of the fixed rate contract until sufficient expiration notice isprovided or the customer selects another retail electric product.

[(1) Contract Expiration.]

[(A) If a customer takes no action in response to a noticeof contract expiration for the continued receipt of retail electric serviceupon the contract's expiration, the REP shall serve the customer pur-suant to a default renewal product that is a month-to-month product.]

[(B) Written notice of contract expiration shall be pro-vided in or with the customer's bill, or in a separate document.]

[(i) If notice is provided with a residential cus-tomer's bill, the notice shall be printed on a separate page. A statementshall be included on the outside of the envelope sent to a residentialcustomer's billing address by mail and in the subject line on the e-mail(if the REP sends the notice by e-mail) that states, "Contract ExpirationNotice. See Enclosed."]

[(ii) If the notice is provided in or with a small com-mercial customer's bill, the REP must include a statement on the out-side of the billing envelope or in the subject line of an electronic billthat states, "Contract Expiration Notice" or "Contract Expiration No-tice. See Enclosed."; or]

[(iii) If notice is provided in a separate document,a statement shall be included on the outside of the envelope and inthe subject line of the e-mail (if customer has agreed to receive officialdocuments by e-mail) that states, "Contract Expiration Notice. See En-closed." for residential customers or for small commercial customers,"Contract Expiration Notice" or "Contract Expiration Notice. See En-closed."]

[(C) A written notice of contract expiration (whetherwith the bill or in a separate envelope) shall set out the following:]

[(i) The date as provided for in subsection (c)(3)(B)of this section that the existing contract will expire.]

[(ii) If the REP provided a calendar date as the enddate for the contract, a statement in bold lettering no smaller than 12point font that no termination penalty shall apply to residential andsmall commercial customers 14 days prior to the date stated as the expi-ration date in the notice. In addition, a description of any fees or chargesassociated with the early termination of a residential customer's fixedrate product that would apply before 14 days prior to the date stated asthe expiration date in the notice must be provided. No such statementsare required if the original contract did not contain a termination fee.]

[(iii) If the REP defined the contract end date by ref-erence to the first meter read on or after a specific calendar date, a state-ment in bold lettering no smaller than 12 point font that no terminationpenalty shall apply to residential customers after receipt of the contractexpiration notice, or that no termination penalty shall apply to smallcommercial customers for 14 days prior to the contract end date. Nosuch statement is required if the original contract did not contain a ter-mination fee.]

[(iv) A description of any renewal offers the REPchooses to make available to the customer and the location of the TOSand EFL for each of those products and a description of actions thecustomer needs to take to continue to receive service from the REPunder the terms of any of the described renewal offers and the deadlineby which actions must be taken.]

[(v) A copy of the EFL for the default renewal prod-uct if the customer takes no action, or if the EFL is not included with thecontract expiration notice, the REP must provide the EFL to the cus-tomer at least 14 days before the expiration of the contract using thesame delivery method as was used for the notice. The contract expira-tion notice must specify how and when the EFL will be made availableto the customer.]


[(vi) A statement that if the customer takes no ac-tion, service to the customer will continue pursuant to the EFL for thedefault renewal product that shall be included as part of the notice ofcontract expiration. The TOS for the default renewal product shall beincluded as part of the notice, unless the TOS applicable to the cus-tomer's existing service also applies to the default renewal product.]

[(vii) A statement that the default service ismonth-to month and may be cancelled at any time with no fee.]

[(2) Affirmative consent. A customer that is currently re-ceiving service from a REP may be reenrolled with the REP for servicewith the same product under which the customer is currently receivingservice, or a different product, by conducting an enrollment pursuant to§25.474 of this title or by obtaining the customer's consent in a record-ing, electronic document, or written letter of authorization consistentwith the requirements of this subsection. Affirmative consent is not re-quiredwhen a REP serves the customer under a default renewal productpursuant to paragraph (1) of this subsection. Each recording, electronicdocument, or written consent form must:]

[(A) Indicate the customer's name, billing address, ser-vice address (for small commercial customers, the ESI ID may be usedrather than the service address);]

[(B) Indicate the identification number of the TOS andEFL under which the customer will be served;]

[(C) Indicate if the customer has received, or when thecustomer will receive copies of the TOS, EFL and YRAC;]

[(D) Indicate the price(s) which the customer is agree-ing to pay;]

[(E) Indicate the date or estimated date of the re-enroll-ment, the contract term, and the estimated start and end dates of con-tract term;]

[(F) Affirmatively inquire whether the customer has de-cided to enroll for service with the product, and contain the customer'saffirmative response; and]

[(G) Be entirely in plain, easily understood language, inthe language that the customer has chosen for communications.]

(3) Contract Expiration.

(A) If a customer takes no action in response to the finalnotice of contract expiration for the continued receipt of retail electricservice upon the contract's expiration, the REPmust serve the customerpursuant to a default renewal product that is a month-to-month productthat the customer may cancel at any time without a fee. The month-to-month product price may vary between billing cycles based on clearterms designed to be easily understood by the average customer.

(B) Written notice of contract expiration must be pro-vided in or with the customer's bill, or in a separate document.

(i) If notice is provided with a residential customer'sbill, the notice must be printed on a separate page. A statement mustbe included in a manner readily visible on the outside of the billingenvelope sent to a residential customer's billing address by mail and inthe subject line on the e-mail (if the REP sends the notice by e-mail)that states, "Contract Expiration Notice. See Enclosed."

(ii) If the notice is provided in or with a small com-mercial customer's bill, the REP must include a statement in a mannerreadily visible on the outside of the billing envelope or in the subjectline of an electronic bill that states, "Contract Expiration Notice" or"Contract Expiration Notice. See Enclosed."; or

(iii) If notice is provided in a separate document, astatement must be included in a manner readily visible on the outside ofthe envelope and in the subject line of the e-mail (if customer has agreedto receive official documents by e-mail) that states, "Contract Expira-tion Notice. See Enclosed." for residential customers or for small com-mercial customers, "Contract Expiration Notice. See Enclosed."

(C) A written notice of contract expiration (whetherwith the bill or in a separate envelope) must set out the following:

(i) The date, in boldfaced and underlined text, asprovided for in subsection (c)(3)(B) of this section that the existingcontract will expire.

(ii) If the REP provided a calendar date as the enddate for the contract, a statement in bold lettering no smaller than 12point font that no termination penalty must apply to residential andsmall commercial customers 14 days prior to the date stated as the expi-ration date in the notice. In addition, a description of any fees or chargesassociated with the early termination of a residential customer's fixedrate product that would apply before 14 days prior to the date stated asthe expiration date in the notice must be provided. No such statementsare required if the original contract did not contain a termination fee.

(iii) If the REP defined the contract end date by ref-erence to the first meter read on or after a specific calendar date, a state-ment in bold lettering no smaller than 12 point font that no terminationpenalty applies to residential customers for 14 days prior to the dateprovided as the "on or after" date included in connection with the firstmeter read language referenced in the notice, or that no terminationpenalty applies to small commercial customers for 14 days prior to thecontract end date. No such statement is required if the original contractdid not contain a termination fee.

(iv) A description of any renewal offers the REPchooses to make available to the customer and the location of the TOSand EFL for each of those products and a description of actions thecustomer needs to take to continue to receive service from the REPunder the terms of any of the described renewal offers and the deadlineby which actions must be taken.

(v) The final notice provided pursuant to subsection(e)(3) of this section must include a copy of the EFL for the defaultrenewal product if the customer takes no action or if the EFL is notincluded with the contract expiration notice, the REP must provide theEFL to the customer at least 14 days before the expiration of the con-tract using the same delivery method as was used for the notice. Thecontract expiration notice must specify how and when the EFL will bemade available to the customer.

(vi) A statement that if the customer takes no action,service to the customer will continue pursuant to the EFL for the defaultrenewal product that must be included as part of the notice of contractexpiration. The TOS for the default renewal product must be includedas part of the notice, unless the TOS applicable to the customer's exist-ing service also applies to the default renewal product.

(vii) The final notice provided pursuant to subsec-tion (e)(3) of this section must include a statement that the default ser-vice is month-to month and may be cancelled at any time with no fee.

(4) Affirmative consent. A customer that is currently re-ceiving service from aREPmay be re-enrolled with the REP for servicewith the same product under which the customer is currently receivingservice, or a different product, by conducting an enrollment pursuant to§25.474 of this title or by obtaining the customer's consent in a record-ing, electronic document, or written letter of authorization consistentwith the requirements of this subsection. Affirmative consent is not re-quiredwhen a REP serves the customer under a default renewal product


pursuant to paragraph (1) of this subsection. Each recording, electronicdocument, or written consent form must:

(A) Indicate the customer's name, billing address, andservice address (for small commercial customers, the ESI ID may beused rather than the service address);

(B) Indicate the identification number of the TOS andEFL under which the customer will be served;

(C) Indicate if the customer has received, or when thecustomer will receive copies of the TOS, EFL,YRAC, and, if applica-ble, AOR;

(D) Indicate the price(s) which the customer is agreeingto pay;

(E) Indicate the date or estimated date of the re-enroll-ment, the contract term, and the estimated start and end dates of con-tract term;

(F) Affirmatively inquire whether the customer has de-cided to enroll for service with the product, and contain the customer'saffirmative response; and

(G) Be entirely in plain, easily understood language, inthe language that the customer has chosen for communications.

(f) Terms of service document. The following informationmust [shall] be conspicuously contained in the TOS:

(1) Identity and contact information. The REP's certifiedname and business name (dba) (if applicable), mailing address, e-mailand Internet address (if applicable), certification number, and a toll-freetelephone number (with hours of operation and time-zone reference).

(2) Pricing and payment arrangements.

(A) Description of the amount of any routine non-recur-ring charges resulting from a move-in or switch that may be charged tothe customer, including but not limited to an out-of-cycle meter read,and connection or reconnection fees;

(B) For small commercial customers, a description ofthe demand charge and how it will be applied, if applicable;

(C) An itemization, including name and cost, of anynon-recurring charges for services that may be imposed on the cus-tomer for the retail electric product, including an application fee,charges for default in payment or late payment, and returned checkscharges;

(D) A description of any collection fees or costs thatmay be assessed to the customer by the REP and that cannot be quan-tified in the TOS; and

(E) A description of payment arrangements and billpayment assistance programs offered by the REP.

(3) Deposits. If the REP requires deposits from its cus-tomers:

(A) a description of the conditions that will trigger arequest for a deposit;

(B) the maximum amount of the deposit or the mannerin which the deposit amount will be determined;

(C) a statement that interest will be paid on the depositat the rate approved by the commission, and the conditions under whichthe customer may obtain a refund of a deposit;

(D) an explanation of the conditions under which a cus-tomer may establish satisfactory credit pursuant to §25.478 of this title(relating to Credit Requirements and Deposits); and

(E) if applicable, the customer's right to post a letter ofguarantee in lieu of a deposit pursuant to §25.478(i) of this title.

(4) Rescission, Termination and Disconnection.

(A) In a conspicuous and separate paragraph or box:

(i) A description of the right of a customer, forswitch requests, to rescind service without fee or penalty of any kindwithin three federal business days after receiving the TOS, pursuantto §25.474 of this title; and

(ii) Detailed instructions for rescinding service, in-cluding the telephone number and, if available, facsimile number ore-mail address that the customer may use to rescind service.

(B) A statement as to how service can be terminated andany penalties that may apply;

(C) A statement of customer's ability to terminate ser-vice without penalty if customer moves to another premises and pro-vides evidence that it is moving, if required, and a forwarding address;and

(D) If the REP has disconnection authority, pursuant to§25.483 of this title (relating to Disconnection of Service), a statementthat the REPmay order disconnection of the customer for non-payment.

(5) Antidiscrimination. A statement informing the cus-tomer that the REP cannot deny service or require a prepayment ordeposit for service based on a customer's race, creed, color, nationalorigin, ancestry, sex, marital status, lawful source of income, level ofincome, disability, familial status, location of a customer in an [a] eco-nomically distressed geographic area, or qualification for low incomeor energy efficiency services. For residential customers, a statementinforming the customer that the REP cannot use a credit score, a credithistory, or utility payment data as the basis for determining the pricefor electric service for a product with a contract term of 12 months orless.

(6) Other terms. Any other material terms and conditions,including exclusions, reservations, limitations of liability, or specialequipment requirements, that are a part of the contract for the retailelectric product.

(7) Contract expiration notice. For a term contract, theTOS must [shall] contain a statement informing the customer that acontract expiration notice will be sent at least 14 days prior to the endof the initial contract term. The TOS must [shall] also state that if thecustomer fails to take action to ensure the continued receipt of retailelectric service upon the contract's expiration, the customer will con-tinue to be served by the REP automatically pursuant to a default re-newal product, which must [shall] be a month-to-month product.

(8) A statement describing the conditions under which thecontract can change and the notice that will be provided if there is achange.

(9) Version number. A REP must [shall] assign an identifi-cation number to each version of its TOS, and must [shall] publish thenumber on the terms of service document.

(g) Electricity Facts Label. The EFLmust [shall] be unique foreach product offered and must [shall] include the information requiredin this subsection. Nothing in this subsection precludes a REP fromcharging a price that is less than its EFL would otherwise provide.


(1) Identity and contact information. The REP's certifiedname and business name (dba) (if applicable), mailing address, e-mailand Internet address (if applicable), certification number, and a toll-freetelephone number (with hours of operation and time-zone reference).

(2) Pricing disclosures. Pricing informationmust [shall] bedisclosed by a REP in an EFL. The EFL must [shall] state specificallywhether the product is a fixed rate, variable price or indexed product.

(A) For a fixed rate product, the EFL must [shall] pro-vide the total average price for electric service reflecting all recurringcharges, excluding state and local sales taxes, and reimbursement forthe state miscellaneous gross receipts tax, to the customer.

(B) For an indexed product, the EFL must [shall] pro-vide sample prices for electric service reflecting all recurring charges,excluding state and local sales taxes, and reimbursement for the statemiscellaneous gross receipts tax, resulting from a reasonable range ofvalues for the inputs to the pre-defined pricing formula.

(C) For a variable price product, the EFL must [shall]provide the total average price for electric service for the first billingcycle reflecting all recurring charges, including any TDU charges thatmay be passed through and excluding state and local sales taxes, andreimbursement for the state miscellaneous gross receipts tax, to thecustomer. Actual changes in TDU charges, changes to the ERCOT orTexas Regional Entity administrative fees charge to loads or changesresulting from federal, state or local laws or regulatory actions that im-pose new or modified fees or costs on a REP that were not implementedprior to the issuance of the EFL and were not included in the averageprice calculation may be directly passed through to customers begin-ning with the customer's first billing cycle.

(D) The total average price for electric service must[shall] be expressed in cents per kilowatt hour, rounded to the nearestone-tenth of one cent for the following usage levels:

(i) For residential customers, 500, 1,000 and 2,000kilowatt hours per month; and

(ii) For small commercial customers, 1,500, 2,500,and 3,500 kilowatt hours per month. If demand charges apply assumea 30 percent load factor.

(E) If a REP combines the charges for retail electric ser-vice with charges for any other product, the REP must [shall]:

(i) If the electric product is sold separately from theother products, disclose the total price for electric service separatelyfrom other products; and

(ii) If the REP does not permit a customer to pur-chase the electric product without purchasing the other products or ser-vices, state the total charges for all products and services as the priceof the total electric service. If the product has a one-time cost up front,for the purposes of the average price calculation, the cost of the productmay be figured in over a 12-month period with 1/12 of the cost beingattributed to a single month.

(F) The following must [shall] be included on the EFLfor specific product types:

(i) For indexed products, the formula used to deter-mine an indexed product, including a website and phone number cus-tomers may contact to determine the current price.

(ii) For a variable price product that increases nomore than a defined percentage as indexed to the customer's previousbilling month's price, a notice in bold type no smaller than 12 pointfont: "Except for price changes allowed by law or regulatory action,this price is the price that will be applied during your first billing cycle;

this price may increase by no more than {insert percentage} percentfrom month-to-month." For residential customers, the following addi-tional statement is required: "Please review the historical price of thisproduct available at {insert specific website address and toll-free tele-phone number}." In the disclosure chart, the box describing whetherthe price can change during the contract period must [shall] include thefollowing statement: "The price applied in the first billing cycle maybe different from the price in this EFL if there are changes in TDSPcharges; changes to the Electric Reliability Council of Texas or TexasRegional Entity, Inc. administrative fees charged to loads; or changesresulting from federal, state or local laws or regulatory actions that im-pose new or modified fees or costs that are outside our control."

(iii) For all other variable price products, a notice inbold type no smaller than 12 point font: "Except for price changes al-lowed by law or regulatory action, this price is the price that will beapplied during your first billing cycle; this price may change in subse-quent months at the sole discretion of {insert REP name}. In the dis-closure chart, the box describing whether the price can change duringthe contract period must [shall] include the following statement: "Theprice applied in the first billing cycle may be different from the price inthis EFL if there are changes in TDSP charges; changes to the ElectricReliability Council of Texas or Texas Regional Entity, Inc. adminis-trative fees charged to loads; or changes resulting from federal, stateor local laws or regulatory actions that impose new or modified fees orcosts that are outside our control." For residential customers, the fol-lowing additional statement is required: "Please review the historicalprice of this product available at {insert specific website address andtoll-free telephone number}."

(3) Fee Disclosures.

(A) If the customer [customers] may be subject to a spe-cial charge for underground service or any similar charge that appliesonly in a part of the TDU service area, the EFL must [shall] includea statement in the electricity price section that some customers will besubject to a special charge that is not included in the total average pricefor electric service and must [shall] disclose how the customer can de-termine the price and applicability of the special charge.

(B) A listing of all fees assessed by the REP that may becharged to the customer and whether the fee is included in the recurringcharges.

(4) Term Disclosure. EFL must [shall] include disclosureof the length of term, minimum service term, if any, and early termina-tion penalties, if any.

(5) Renewable Energy Disclosures. The EFL must [shall]include the percentage of renewable energy of the electricity productand the percentage of renewable energy of the statewide average gen-eration mix.

(6) Format of Electricity Facts Label. REPs must use thefollowing format for the EFLwith the pricing chart and disclosure chartshown. The additional language is for illustrative purposes. It does notinclude all reporting requirements as outlined above. Such subsectionsshould be referred to for determination of the required reporting itemson the EFL. Each EFL must [shall] be printed in type no smaller thanten points in size, unless a different size is specified in this section, andmust [shall] be formatted as shown in this paragraph:Figure: 16 TAC § 25.475(g)(6)[Figure: 16 TAC § 25.475(g)(6)]

(7) Version number. A REP must [shall] assign an identifi-cation number to each version of its EFL, and must [shall] publish thenumber on the EFL.


(h) Your Rights as a Customer disclosure. The information setout in this section must [shall] be included in a REP's "Your Rights asa Customer" document in plain language, to summarize the standardcustomer protections provided by this subchapter or additional protec-tions provided by the REP.

(1) A YRAC document must [shall] be consistent with theTOS for the retail product.

(2) The YRAC document must [shall] inform the customerof the REP's complaint resolution policy pursuant to §25.485 of thistitle (relating to Customer Access and Complaint Handling) and pay-ment arrangements and deferred payment policies pursuant to §25.480of this title (relating to Bill Payment and Adjustments).

(3) The YRAC document must [shall] inform the customerof the REP's procedures for reporting outages and the steps necessaryto have service restored or reconnected after an involuntary suspensionor disconnection.

(4) The YRAC must provide information the REP hasreceived from the TDU pursuant to PURA §17.003(e) regarding theTDU's procedures for implementing involuntary load shedding initi-ated by the independent organization certified under PURA §39.151for the ERCOT power region, and, if applicable, where any additionaldetails regarding those procedures or relevant updates may be located.The REP may fulfill this requirement by providing a website addresswith the required information. Each TDU must develop such infor-mation and resources by September 1, 2021 and make the websiteaddress where such information can be viewed available to REPs. AREP may provide this information at a website address other than thewebsite addresses made available by the TDUs. A TDU or other entityproviding a website address is required to update this informationwithin 30 days of any material change in the information.

(5) [(4)] The YRAC document must [shall] inform thecustomer of the customer's right to have the meter tested pursuantto §25.124 of this title (relating to Meter Testing), or in accordancewith the tariffs of a transmission and distribution utility, a municipallyowned utility, or an electric cooperative, as applicable, and the REP'sability in all cases to make that request on behalf of the customer by astandard electronic market transaction, and the customer's right to beinstructed on how to read the meter, if applicable.

(6) [(5)] The YRAC document must [shall] inform the cus-tomer of the availability of:

(A) Financial and energy assistance programs for resi-dential customers;

(B) Any special services such as readers or notices inBraille or TTY;

(C) Special policies or programs available to residen-tial customers designated as chronic condition or critical care under§25.497 of this title and the procedure for a customer to apply to beconsidered for such designations; and [Special policies or programsavailable to residential customers with physical disabilities, includingresidential customers who have a critical need for electric service tomaintain life support systems; and]

(D) Any available discounts that may be offered by theREP for qualified low-income residential customers. A REPmay com-ply with this requirement by providing the customer with instructionsfor how to inquire about such discounts.

(7) [(6)] The YRAC document must [shall] inform the cus-tomer of the following customer rights and protections:

(A) Unauthorized switch protections applicable under§25.495 of this title (relating to Unauthorized Change of Retail ElectricProvider);

(B) The customer's right to dispute unauthorizedcharges on the customer's bill as set forth in §25.481 of this title(relating to Unauthorized Charges);

(C) Protections relating to disconnection of service pur-suant to §25.483 of this title;

(D) Non-English language requirements pursuant to§25.473 of this title (relating to Non-English Language Requirements);

(E) Availability of a Do Not Call List pursuant to§25.484 of this title (relating to Electric No-Call List) and §26.37 ofthis title (relating to Texas No-Call List); and

(F) Privacy rights regarding customer proprietary infor-mation as provided by §25.472 of this title (relating to Privacy of Cus-tomer Information).

(8) [(7)] Identity and contact information. The REP's cer-tified name and business name (dba), certification number, mailing ad-dress, e-mail and Internet address (if applicable), and a toll-free tele-phone number (with hours of operation and time-zone reference) atwhich the customer may obtain information concerning the product.

(i) Advertising claims. If a REP or aggregator advertises ormarkets the specific benefits of a particular electric product, the REP oraggregator must [shall] provide the name of the electric product offeredin the advertising or marketing materials to the commission or its staff,upon request. All advertisements and marketing materials distributedby or on behalf of a REP or aggregator must [shall] comply with thissection. REPs and aggregators are responsible for representations tocustomers and prospective customers by employees or other agents ofthe REP concerning retail electric service that are made through adver-tising, marketing or other means.

(1) Print advertisements. Print advertisements and market-ing materials, including direct mail solicitations that make any claimsregarding price, savings, or environmental quality for an electricityproduct of the REP compared to a product offered by another REPmust[shall] include the EFL of the REP making the claim. In lieu of includ-ing an EFL, the following statement must [shall] be provided: "You canobtain important standardized information that will allow you to com-pare this product with other offers. Contact (name, telephone number,and Internet address (if available) of the REP)." If the REPs phone num-ber or website address is included on the advertisement, such phonenumber or website address is not required in the disclaimer statement.Upon request, a REP must [shall] provide to the commission the con-tract documents relating to a product being advertised and any infor-mation used to develop or substantiate comparisons made in the adver-tisement.

(2) Television, radio, and internet advertisements. A REPmust [shall] include the following statement in any television, Internet,or radio advertisement that makes a specific claim about price, sav-ings, or environmental quality for an electricity product of the REPcompared to a product offered by another REP: "You can obtain im-portant standardized information that will allow you to compare thisproduct with other offers. Contact (name, telephone number and web-site (if available) of the REP)." If the REPs phone number or websiteaddress is included on the advertisement, such phone number or web-site address is not required in the disclaimer statement. This statementis not required for general statements regarding savings or environmen-tal quality, but must [shall] be provided if a specific price is included inthe advertisement, or if a specific statement about savings or environ-mental quality compared to another REP is made. Upon request, a REP


must [shall] provide to the commission the contract documents relatingto a product being advertised and any information used to develop orsubstantiate comparisons made in the advertisement.

(3) Outdoor advertisements. A REP must [shall] include,in a font size and format that is legible to the intended audience, itscertified name or commission authorized business name, certificationnumber, telephone number andwebsite [Internet address] (if available).

(4) Renewable energy claims. A REP must [shall] authen-ticate its sales of renewable energy in accordance with §25.476 of thistitle (relating to Renewable and Green Energy Verification). If a REPrelies on supply contracts to authenticate its sales of renewable energy,it must [shall] file a report with the commission, not later than March15 of each year demonstrating its compliance with this paragraph and§25.476 of this title.

(j) Acknowledgement of Risk. Before a residential or smallcommercial customer's enrollment in an indexed product or a productthat contains a separate assessment of ancillary service charges, an ag-gregator, broker, or retail electric provider must obtain an AOR, signedby the customer, verifying that the customer accepts the potential pricerisks associated with the product.

(1) for indexed products other than wholesale indexedproducts the AOR must include the following statement in clear,boldfaced text: "This is an indexed product. I understand that if Ienroll in this product, the rate I will be charged for electricity canchange for reasons beyond my control. These changes may result inunexpectedly high bills, potentially significantly higher than previousbills, and I must pay any amount I am properly billed. I understandthe risks involved with this plan"

(2) for products that contain a separate assessment of an-cillary service charges the AOR must include the following statementin clear, boldfaced text: "This product contains a separate assessmentof ancillary service charges. I understand that if I enroll in this product,the rate I will be charged for electricity can change for reasons beyondmy control. These changes may result in unexpectedly high bills, po-tentially significantly higher than previous bills, and I must pay anyamount I am properly billed. I understand the risks involved with thisplan."

§25.479. Issuance and Format of Bills.

(a) Application. This section applies[, beginning April 1,2010,] to a retail electric provider (REP) that is responsible for issuingelectric service bills to retail customers, unless the REP is issuing aconsolidated bill (both energy services and transmission and distri-bution services) on behalf of an electric cooperative or municipallyowned utility. This section does not apply to a municipally ownedutility or electric cooperative issuing bills to its customers in its ownservice territory.

(b) Frequency and delivery of bills.

(1) A REP must [shall] issue a bill monthly to each cus-tomer, unless service is provided for a period of less than one month.A REP may issue a bill less frequently than monthly if both the cus-tomer and the REP agree to such an arrangement.

(2) A bill must [Bills shall be] be issued no later than 30days after the REP receives the usage data and any related invoicesfor non-bypassable charges, unless validation of the usage data and in-voice received from a transmission and distribution utility by the REPor other efforts to determine the accuracy of usage data or invoicesdelay billing by a REP past 30 days. The number of days to issue abill must [shall] be extended beyond 30 days to the extent necessaryto support agreements between REPs and customers for less frequent

billing, as provided in paragraph (1) of this subsection or for consoli-dated billing.

(3) A REP must [shall] issue bills to residential customersinwriting and delivered via theUnited States Postal Service. REPsmayprovide bills to a customer electronically in lieu of written mailingsif both the customer and the REP agree to such an arrangement. Anaffiliated REP or a provider of last resort must [shall] not require acustomer to agree to such an arrangement as a condition of receivingelectric service.

(4) A REPmust [shall] not charge a customer a fee for issu-ing a standard bill, which is a bill delivered via U.S. mail that complieswith the requirements of this section. The customer may be charged afee or given a discount for non-standard billing in accordance with theterms of service document.

(c) Bill content.

(1) Each customer's bill must [shall] include the followinginformation:

(A) The certified name and address of the REP and thenumber of the license issued to the REP by the commission;

(B) A toll-free telephone number, in bold-face type,which the customer can call during specified hours for inquiries andto make complaints to the REP about the bill;

(C) A toll-free telephone number that the customer maycall 24 hours a day, seven days a week, to report power outages andconcerns about the safety of the electric power system;

(D) The service address, electric service identifier(ESI), and account number of the customer;

(E) The service period for which the bill is rendered;

(F) The date on which the bill was issued;

(G) The payment due date of the bill and, if different,the date by which payment from the customer must be received by theREP to avoid a late charge or other collection action;

(H) The current charges for electric service as disclosedin the customer's terms of service document, including applicable taxesand fees labeled "current charges." If the customer is on a level or av-erage payment plan, the level or average payment due must [shall] beclearly shown in addition to the current charges;

(I) A calculation of the average unit price for electricservice for the current billing period, labeled, "The average price youpaid for electric service this month." The calculation of the averageprice for electric service must [shall] reflect the total of all fixed andvariable recurring charges, but not include state and local sales taxes,reimbursement for the state miscellaneous gross receipts tax, and anynonrecurring charges or credits, divided by the kilowatt-hour consump-tion, and must [shall] be expressed as a cents per kilowatt-hour amountrounded to the nearest one-tenth of one cent.

(J) The identification and itemization of charges otherthan for electric service as disclosed in the customer's terms of servicedocument;

(K) The itemization and amount of any non-recurringcharge, including late fees, returned check fees, restoration of servicefees, or other fees disclosed in the REP's terms of service documentprovided to the customer;

(L) The balances from the preceding bill, paymentsmade by the customer since the preceding bill, and the amount thecustomer is required to pay by the due date, labeled "amount due;"


(M) A notice that the customer has the opportunity tovoluntarily donate money to the bill payment assistance program, pur-suant to §25.480(g)(2) of this title ( relating to Bill Payment and Ad-justments);

(N) If available to the REP on a standard electronictransaction, if the bill is based on kilowatt-hour (kWh) usage, thefollowing information:

(i) the meter reading at the beginning of the periodfor which the customer is being billed, labeled "previous meter read,"and the meter reading at the end of the period for which the customer isbeing billed, labeled "current meter read," and the dates of such read-ings;

(ii) the kind and number of units measured, includ-ing kWh, actual kilowatts (kW), or kilovolt ampere (kVa);

(iii) if applicable, billed kW or kVa;

(iv) whether the bill was issued based on estimatedusage; and

(v) any conversions from meter reading units tobilling units, or any other calculations to determine billing units fromrecording or other devices, or any other factors used in determiningthe bill, unless the customer is provided conversion charts;

(O) Any amount owed under a written guarantee agree-ment, provided the guarantor was previously notified in writing by theREP of an obligation on a guarantee as required by §25.478 of this title(relating to Credit Requirements and Deposits);

(P) A conspicuous notice of any services or productsbeing provided to the customer that have been added since the previousbill;

(Q) Notification of any changes in the customer's pricesor charges due to the operation of a variable rate feature previouslydisclosed by the REP in the customer's terms of service document;

(R) The notice required by §25.481(d) of this title (re-lating to Unauthorized Charges); and

(S) For residential customers, on the first page of thebill in at least 12-point font the phrase, "for more information aboutresidential electric service please visit www.powertochoose.com."

(2) If a REP separately identifies a charge defined by oneof the terms in this paragraph on the customer's bill, then the term inthis paragraph must be used to identify that charge, and such term andits definition must [shall] be easily located on the REP's website andavailable to a customer free of charge upon request. Nothing in thisparagraph precludes a REP from aggregating transmission and distri-bution utility (TDU) or REP charges. For any TDU charge(s) listedin this paragraph, the amount billed by the REP must [shall] not ex-ceed the amount of the TDU tariff charge(s). The label for any TDUcharge(s) may also identify the TDU that issued the charge(s). A REPmay use a different term than a defined term by adding or deleting asuffix, by adding the word "total" to a defined term, where appropriate,changing the use of lower-case or capital letters or punctuation, or us-ing the acceptable abbreviation specified in this paragraph for a definedterm. If an abbreviation other than the acceptable abbreviation is usedfor the term, then the term must also be identified on the customer'sbill.

(A) Advanced metering charge -- A charge assessed torecover a TDU's charges for Advanced Metering Systems, to the ex-tent that they are not recovered in a TDU's standard metering charge.Acceptable abbreviation: Advanced Meter.

(B) Competition Transition Charge -- A charge as-sessed to recover a TDU's charges for nonsecuritized costs associatedwith the transition to competition. Acceptable abbreviation: Competi-tion Transition.

(C) Energy Efficiency Cost Recovery Factor -- Acharge assessed to recover a TDU's costs for energy efficiencyprograms, to the extent that the TDU charge is a separate chargeexclusively for that purpose that is approved by the Public UtilityCommission. Acceptable abbreviation: Energy Efficiency.

(D) Late Payment Penalty -- A charge assessed for latepayment in accordance with Public Utility Commission rules.

(E) Meter Charge -- A charge assessed to recover aTDU's charges for metering a customer's consumption, to the extentthat the TDU charge is a separate charge exclusively for that purposethat is approved by the Public Utility Commission.

(F) Miscellaneous Gross Receipts Tax Reimbursement-- A fee assessed to recover the [he] miscellaneous gross receipts taximposed on retail electric providers operating in an incorporated city ortown having a population ofmore than 1,000. Acceptable abbreviation:Gross Receipts Reimb.

(G) Nuclear Decommissioning Fee -- A charge as-sessed to recover a TDU's charges for decommissioning of nucleargenerating sites. Acceptable abbreviation: Nuclear Decommission.

(H) PUC Assessment -- A fee assessed to recover thestatutory fee for administering the Public Utility Regulatory Act.

(I) Sales tax -- Sales tax collected by authorized taxingauthorities, such as the state, cities and special purpose districts.

(J) TDU Delivery Charges -- The total amounts as-sessed by a TDU for the delivery of electricity to a customer overpoles and wires and other TDU facilities not including discretionarycharges.

(K) Transmission Distribution Surcharges -- One ormore TDU surcharge(s) on a customer's bill in any combination. Sur-charges include charges billed as tariff riders by the TDU. Acceptableabbreviation: TDU Surcharges.

(L) Transition Charge -- A charge assessed to recovera TDU's charges for securitized costs associated with the transition tocompetition.

(3) If the REP includes any of the following terms in itsbills, the term must [shall] be applied in a manner consistent with thedefinitions, and such term and its definition must [shall] be easily lo-cated on the REP's website and available to a customer free of chargeupon request:

(A) Base Charge -- A charge assessed during eachbilling cycle without regard to the customer's demand or energyconsumption.

(B) Demand Charge -- A charge based on the rate atwhich electric energy is delivered to or by a system at a given instant,or averaged over a designated period, during the billing cycle.

(C) Energy Charge -- A charge based on the electric en-ergy (kWh) consumed.

(4) A REP must [shall] provide an itemization of charges,including non-bypassable charges, to the customer upon the customer'srequest and, to the extent that the charges are consistent with the termsset out in paragraph (2), of this subsection, the terms must [shall] beused in the itemization.


(5) A customer's electric bill must [shall] not containcharges for electric service from a service provider other than thecustomer's designated REP.

(6) A REP must [shall] include on each residential andsmall commercial billing statement, in boldfaced and underlined type,the date, as provided for in §25.475(c)(3)(B) of this title (relatingto General Retail Electric Provider Requirements and InformationDisclosure to Residential and Small Commercial Customers) that afixed rate product will expire.

(7) To the extent that a REP uses the concepts identified inthis paragraph in a customer's bill, it must [shall] use the term set outin this paragraph, and the definitions in this paragraph must [shall] beeasily located on the REP's website. A REP may not use a differentterm for a concept that is defined in this paragraph.

(A) kW -- Kilowatt, the standard unit for measuringelectricity demand, equal to 1,000 watts;

(B) kWh -- Kilowatt-hour, the standard unit for measur-ing electricity energy consumption, equal to 1,000 watt-hours; and

(8) Notice of contract expiration may be provided in a billin accordance with §25.475 of this title.

(d) Public service notices. A REP must [shall], as required bythe commission after reasonable notice, provide brief public servicenotices to its customers. The REP must [shall] provide these publicservice notices to its customers on its billing statements, as a separatedocument issued with its bill, by electronic communication, or by otheracceptable mass communication methods, as approved by the commis-sion. Additionally, in April and October of each year, or as otherwisedirected by the commission, the REP must provide information to eachcustomer along with the customer's bill about:

(1) The electric utility's procedures for implementing in-voluntary load shedding initiated by the independent organization cer-tified for the ERCOT power region under PURA §39.151;

(2) The types of customers who may be considered criticalcare residential customers, critical load industrial customers, or criticalload according to commission rules adopted under PURA §38.076;

(3) The procedure for a customer to apply to be considereda critical care customer, a critical load industrial customer, or criticalload according to commission rules adopted under PURA §38.076; and

(4) Reducing electricity use at times when involuntary loadshedding events may be implemented.

(e) Estimated bills. If a REP is unable to issue a bill basedon actual meter reading due to the failure of the TDU, the registrationagent, municipally owned utility or electric cooperative to obtain ortransmit ameter reading or an invoice for non-bypassable charges to theREP on a timely basis, the REPmay issue a bill based on the customer'sestimated usage and inform the customer of the reason for the issuanceof the estimated bill.

(f) Non-recurring charges. A REP may pass through to itscustomers all applicable non-recurring charges billed to the REP bya TDU, municipally owned utility, or electric cooperative as a resultof establishing, switching, disconnecting, reconnecting, or maintain-ing service to an applicant or customer. In the event of a meter test, theTDU, municipally owned utility, electric cooperative, and REP must[shall] comply with the requirements of §25.124 of this title (relating toMeter Testing) or with the requirements of the tariffs of a TDU, munic-ipally owned utility, or electric cooperative, as applicable. The TDU,municipally owned utility, or electric cooperative must [shall] maintain

a record of all meter tests performed at the request of a REP or a REP'scustomers.

(g) Record retention. A REP must [shall] maintain monthlybilling and payment records for each account for at least 24 months af-ter the date the bill is mailed. The billing records must [shall] containsufficient data to reconstruct a customer's billing for a given period.A copy of a customer's billing records may be obtained by that cus-tomer on request, and may be obtained once per 12-month period, atno charge.

(h) Transfer of delinquent balances or credits. If the customerhas an outstanding balance or credit owed to the customer's currentREP that is due from a previous account in the same customer class,then the customer's current REP may transfer that balance to the cus-tomer's current account. The delinquent balance and specific accountor address must [shall] be identified as such on the bill. There must[shall] be no balance transfers between REPs, other than transfer of adeposit, as specified in §25.478(j)(2) of this title.

§25.498. Prepaid Service.

(a) Applicability. This section applies to retail electricproviders (REPs) that offer a payment option in which a customer paysfor retail service prior to the delivery of service and to transmission anddistribution utilities (TDUs) that have installed advanced meters andrelated systems. A REP may not offer prepaid service to residential orsmall commercial customers unless it complies with this section. Thefollowing provisions do not apply to prepaid service, unless otherwiseexpressly stated:

(1) §25.479 of this title (relating to Issuance and Format ofBills);

(2) §25.480(b), (e)(3), (h), (i), (j), and (k) of this title (re-lating to Bill Payment and Adjustments); and

(3) §25.483 of this title (relating to Disconnection of Ser-vice), except for §25.483(b)(2)(A) and (B), (d), and (e)(1)-(6) of thistitle.

(b) Definitions. The following terms, when used in this sec-tion, have the following meanings unless the context indicates other-wise.

(1) Connection balance -- A current balance, not to exceed$75 for a residential customer, required to establish prepaid service orreconnect prepaid service following disconnection.

(2) Current balance -- An account balance calculated con-sistent with subsection (c)(6) of this section.

(3) Customer prepayment device or system (CPDS) -- Adevice or system that includes metering and communications capabil-ities that meet the requirements of this section, including a device orsystem that accesses customer consumption information from a TDU'sadvanced metering system (AMS). The CPDS may be owned by theREP, and installed by the TDU consistent with subsection (c)(2)-(4) ofthis section.

(4) Disconnection balance -- An account balance, not to ex-ceed $10 for a residential customer, below which the REP may initiatedisconnection of the customer's service.

(5) Landlord -- A landlord or property manager or otheragent of a landlord.

(6) Postpaid service -- A payment option offered by a REPfor which the customer normally makes a payment for electric serviceafter the service has been rendered.


(7) Prepaid service -- A payment option offered by a REPfor which the customer normally makes a payment for electric servicebefore service is rendered.

(8) Prepaid disclosure statement (PDS) -- A document de-scribed by subsection (e) of this section.

(9) Summary of usage and payment (SUP) -- A documentdescribed by subsection (h) of this section.

(c) Requirements for prepaid service.

(1) A REPmust [shall] file with the commission a notice ofits intent to provide prepaid service prior to offering such service. Thenotice of intent must [shall] include a description of the type of CPDSthe REP will use, and the initial Electricity Facts Label (EFL), Termsof Service (TOS), and PDS for the service. Except as provided in sub-section (m) of this section, a REP-controlled CPDS or TDU settlementprovisioned meter is required for any prepaid service.

(2) A CPDS that relies on metering equipment other thanthe TDUmeter must [shall] conform to the requirements and standardsof §25.121(e) of this title (relating to Meter Requirements), §25.122of this title (relating to Meter Records), and section 4.7.3 of the tarifffor retail electric delivery service, which is prescribed by §25.214 ofthis title (relating to Terms and Conditions of Retail Delivery ServiceProvided by Investor Owned Transmission and Distribution Utilities).

(3) A TDU may, consistent with its tariff, install CPDSequipment, including meter adapters and collars on or near the TDU'smeters. Such installation does not constitute competitive energy ser-vices as this term is defined in §25.341(3) of this title (relating to Def-initions).

(4) A CPDS must [shall] not cause harmful interferencewith the operation of a TDU's meter or equipment, or the performanceof any of the TDU's services. If a CPDS interfereswith the TDU'smeteror equipment, or TDU's services, the CPDS must [shall] be promptlycorrected or removed. ACPDS that relies on communications channelsother than those established by the TDU must [shall] protect customerinformation in accordance with §25.472 of this title (relating to Privacyof Customer Information).

(5) A REP may choose the means by which it communi-cates required information to a customer, including an in-home deviceat the customer's premises, United States Postal Service, email, tele-phone, mobile phone, or other electronic communications. The meansby which the REP will communicate required information to a cus-tomer must [shall] be described in the TOS and the PDS.

(A) A REP must [shall] communicate time-sensitivenotifications required by paragraph (7)(B), (D), and (E) of this subsec-tion by telephone, mobile phone, or electronic means.

(B) A REP must [shall] , as required by the commis-sion after reasonable notice, provide brief public service notices to itscustomers. The REP must [shall] provide these public service noticesto its customers by electronic communication, or by other acceptablemass communication methods, as approved by the commission.

(6) AREPmust [shall] calculate the customer's current bal-ance by crediting the account for payments received and reducing theaccount balance by known charges and fees that have been incurred,including charges based on estimated usage as allowed in paragraph(11)(E) of this subsection.

(A) The REP may also reduce the account balance by:

(i) estimated applicable taxes; and

(ii) estimated TDU charges that have been incurredin serving the customer and that, pursuant to the TOS, will be passedthrough to the customer.

(B) If the customer's balance reflects estimated chargesand taxes authorized by subparagraph (A) of this paragraph, the REPmust [shall] promptly reconcile the estimated charges and taxes withactual charges and taxes, and credit or debit the balance accordinglywithin 72 hours after actual consumption data or a statement of chargesfrom the TDU is available.

(C) A REP may reverse a payment for which there areinsufficient funds available or that is otherwise rejected by a bank,credit card company, or other payor.

(D) If usage sent by the TDU is estimated or the REPestimates consumption according to paragraph (11)(E) of this subsec-tion, the REP must [shall] promptly reconcile the estimated consump-tion and associated charges with the actual consumption and associatedcharges within 72 hours after actual consumption data is available tothe REP.

(7) A REP must [shall]:

(A) on the request of the customer, provide the cus-tomer's current balance calculated pursuant to paragraph (6) of this sub-section, including the date and time the current balance was calculatedand the estimated time or days of paid electricity remaining; and

(B) make the current balance available to the customereither:

(i) continuously, via the internet, phone, or anin-home device; or

(ii) within two hours of the REP's receipt of a cus-tomer's balance request, by the means specified in the Terms of Servicefor making such a request.

(C) communicate to the customer the current price forelectric service calculated as required by §25.475(g)(2)(A)-(E) of thistitle (relating to General Retail Electric Provider Requirements andInformation Disclosures to Residential and Small Commercial Cus-tomers);

(D) provide a warning to the customer at least one dayand not more than seven days before the customer's current balance isestimated by the REP to drop to the disconnection balance;

(E) provide a confirmation code when the customermakes a payment by credit card, debit card, or electronic check. AREP is not required to provide a confirmation code or receipt forpayment sent by mail or electronic bill payment system. The REPmust [shall] provide a receipt showing the amount paid for paymentin person. At the customer's request, the REP must [shall] confirmall payments by providing to the customer the last four digits of thecustomer's account number or Electric Service Identifier (ESI ID),payment amount, and the date the payment was received;

(F) ensure that a CPDS controlled by the REP does notimpair a customer's ability to choose a different REP or any electric ser-vice plans offered by the REP that do not require prepayment. Whenthe REP receives notice that a customer has chosen a new REP, theREP must [shall] take any steps necessary to facilitate the switch on aschedule that is consistent with the effective date stated on the ElectricReliability Council of Texas (ERCOT) enrollment transaction and ER-COT's rules for processing such transactions; and

(G) refund to the customer or an energy assistanceagency, as applicable, any unexpended balance from the account


within ten business days after the REP receives the final bill and finalmeter read from the TDU.

(i) In the case of unexpended funds provided by anenergy assistance agency, the REP must [shall] refund the funds to theenergy assistance agency and identify the applicable customer and thecustomer's address associated with each refund.

(ii) In the case of unexpended funds provided by thecustomer that are less than five dollars, the REP must [shall] communi-cate the unexpended balance to the customer and state that the customermay contact the REP to request a refund of the balance. Once the REPhas received the request for refund from the customer, the REP must[shall] refund the balance within ten business days.

(8) Nothing in this subsection limits a customer from ob-taining a SUP.

(9) The communications provided under paragraph (7)(A)-(D) of this subsection and any confirmation of payment as described inparagraph (7)(E) of this subsection, except a receipt provided whenthe payment is made in person at a third-party payment location, must[shall] be provided in English or Spanish, at the customer's election.

(10) A REP must [shall] cooperate with energy assistanceagencies to facilitate the provision of energy assistance payments torequesting customers.

(11) A REP must [shall] not:

(A) tie the duration of an electric service contract to theduration of a tenant's lease;

(B) require, or enter into an agreement with a landlordrequiring, that a tenant select the REP as a condition of a lease;

(C) require a connection balance in excess of $75 for aresidential customer;

(D) require security deposits for electric service; or

(E) base charges on estimated usage, other than usageestimated by the TDU or estimated by the REP in a reasonable mannerfor a time period in which the TDU has not provided actual or estimatedusage data on a web portal within the time prescribed by §25.130(g) ofthis title (relating to Advanced Metering) and in which the TDU-pro-vided portal does not provide the REP the ability to obtain on-demandusage data.

(12) AREP providing servicemust [shall] not charge a cus-tomer any fee for:

(A) transitioning from a prepaid service to a postpaidservice, but notwithstanding §25.478(c)(3) of this title (relating toCredit Requirements and Deposits), a REP may require the customerto pay a deposit for postpaid service consistent with §25.478(b) or(c)(1) and (2) of this title and may:

(i) require the deposit to be paid within ten days afterissuance of a written disconnection notice that requests a deposit; or

(ii) bill the deposit to the customer.

(B) the removal of equipment; or

(C) the switching of a customer to another REP, or oth-erwise cancelling or discontinuing taking prepaid service for reasonsother than nonpayment, but may charge and collect early terminationfees pursuant to §25.475 of this title.

(13) If a customer owes a debt to the REP for electricservice, the REP may reduce the customer's account balance by theamount of the debt. Before reducing the account balance, the REP

must notify the customer of the amount of the debt and that thecustomer's account balance will be reduced by the amount of the debtno sooner than 10 days after the notice required by this paragraph isissued.

(14) In addition to the connection balance, a REP may re-quire payment of applicable TDU fees, if any, prior to establishing elec-tric service or reconnecting electric service.

(15) A REP that provides prepaid service to a residentialcustomer must [shall] not charge an amount for electric service that ishigher than the price charged by the POLR in the applicable TDU ser-vice territory. The price for prepaid service to a residential customercalculated as required by §25.475(g)(2)(A)-(E) of this title must [shall]be equal to or lower than at least one of the tests described in subpara-graphs (A)-(C) of this paragraph:

(A) The minimum POLR rate for the residential cus-tomer class at the 500 kilowatt-hour (kWh), 1,000 kWh, and 2,000kWh usage levels as shown on the POLR EFL posted on the com-mission's website for the applicable TDU service territory. When anupdated POLR EFL is posted on the commission's website, the REP, atthe REP's option, may continue to reference the prior POLR EFL to en-sure compliance with this paragraph for prepaid service prices chargedduring the first 30 days, beginning the date that the updated POLR EFLis posted.

(B) The maximum POLR rate for the residential cus-tomer class calculated pursuant to §25.43(m)[(l)] of this title (relatingto Provider of Last Resort (POLR)).

(C) The average POLR rate for the residential customerclass at the 500 kWh, 1,000 kWh, and 2,000 kWh usage levels using theformula described in §25.43(m)[(l)] of this title for the applicable TDUservice territory, with the LSP energy charge calculated as the simpleaverage of the RTSPPs over the prior month for the load zone locatedpartially or wholly in the customer's TDU service territory that had thehighest simple average price. For prepaid service prices charged by aREP up to and including the tenth business day of a month, the testmay be met by using the average POLR rate calculation for the monthpreceding the prior month.

(D) For a fixed rate product, the REP must show thatthe prepaid service prices calculated under §25.475(g)(2)(A), (D)-(E)of this title are equal to or lower than one of the tests described insubparagraphs (A) and (C) of this paragraph at the time the REP makesthe offer and provided that the customer accepts the offer within 30days.

(d) Customer acknowledgement. As part of the enrollmentprocess, a REP must [shall] obtain the applicant's or customer's ac-knowledgement of the following statement: "The continuation of elec-tric service depends on your prepaying for service on a timely basisand if your balance falls below {insert dollar amount of disconnectionbalance}, your service may be disconnected with little notice. Someelectric assistance agencies may not provide assistance to customersthat use prepaid service." The REP must [shall] obtain this acknowl-edgement using any of the authorization methods specified in §25.474of this title (relating to Selection of Retail Electric Provider).

(e) Prepaid disclosure statement (PDS). A REP must [shall]provide a PDS contemporaneously with the delivery of the contractdocuments to a customer pursuant to §25.474 of this title and as re-quired by subsection (f) of this section. A REP must also provide aPDS contemporaneously with any advertisement or other marketingmaterials not addressed in subsection (f) of this section that include aspecific price or cost for prepaid service. The commission may adopt


a form for a PDS. The PDS must [shall] be a separate document andmust [shall] be at a minimumwritten in 12-point font, and must [shall]:

(1) provide the following statement: "The continuation ofelectric service depends on you prepaying for service on a timely basisand if your current balance falls below the disconnection balance, yourservice may be disconnected with little notice.";

(2) inform the customer of the following:

(A) the connection balance that is required to initiate orreconnect electric service;

(B) the acceptable forms of payment, the hours thatpayment can be made, instructions on how to make payments, anyrequirement to verify payment and any fees associated with makinga payment;

(C) when service may be disconnected and the discon-nection balance;

(D) that prepaid service is not available to critical careor chronic condition residential customers as these terms are definedin §25.497 of this title (relating to Critical Load Industrial Customers,Critical Load Public Safety Customers, Critical Care Residential Cus-tomers and Chronic Condition Residential Customers);

(E) the means by which the REP will communicate re-quired information;

(F) the availability of deferred payment plans and, if aREP reserves the right to apply a switch-hold while the customer issubject to a deferred payment plan, that a switch-hold may apply untilthe customer satisfies the terms of the deferred payment plan, and thata switch-hold means the customer will not be able to buy electricityfrom other companies while the switch-hold is in place;

(G) the availability of energy bill payment assistance,including the disclosure that some electric assistance agencies may notprovide assistance to customers that use prepaid service and the state-ment "If you qualify for low-income status or low-income assistance,have received energy assistance in the past, or you think you will be inneed of energy assistance in the future, you should contact the billingassistance program to confirm that you can qualify for energy assis-tance if you need it."; and

(H) an itemization of any non-recurring REP fees andcharges that the customer may be charged.

(3) be prominently displayed in the property managementoffice of any multi-tenant commercial or residential building at whichthe landlord is acting as an agent of the REP.

(f) Marketing of prepaid services.

(1) This paragraph applies to advertisements conveyedthrough print, television, radio, outdoor advertising, prerecordedtelephonic messages, bill inserts, bill messages, and electronic mediaother than [Internet] websites. If the advertisement includes a specificprice or cost, the advertisement must [shall] include in a manner thatis clear and conspicuous to the intended audience:

(A) any non-recurring fees, and the total amount ofthose fees, that will be deducted from the connection balance toestablish service;

(B) the following statement, if applicable: "Utility feesmay also apply and may increase the total amount that you pay.";

(C) the maximum fee per payment transaction that maybe imposed by the REP; and

(D) the following statement: "You can obtain importantstandardized information that will allow you to compare this productwith other offers. Contact (name, telephone number, and website [In-ternet address] (if available) of the REP)." If the REP's phone numberor website address is already included on the advertisement, the REPneed not repeat the phone number or website as part of this requiredstatement. The REP must [shall] provide the PDS and EFL to a personwho requests standardized information for the product.

(2) This paragraph applies to all advertisements and mar-keting that include a specific price or cost conveyed through [Internet]websites, direct mail, mass e-mails, and any other media not addressedby paragraphs (1), (3), and (4) of this subsection. In addition tomeetingthe requirements of §25.474(d)(7) of this title, a REP must [shall] in-clude the PDS and EFL on [Internet] websites and in direct mail, masse-mails, and any other media not addressed by paragraphs (1), (3), and(4) of this subsection. For electronic communications, the PDS andEFL may be provided through a hyperlink.

(3) This paragraph applies to outbound telephonic solicita-tions initiated by the REP. A REP must [shall] disclose the following:

(A) information required by paragraph (1)(A)-(C) ofthis subsection;

(B) when service may be disconnected, the disconnec-tion balance, and any non-TDU disconnection fees;

(C) the means by which the REP will communicate re-quired information; and

(D) the following statement: "You have the right to re-view standardized documents before you sign up for this product." TheREP must [shall] provide the PDS and EFL to a person who requestsstandardized information for the product.

(4) This paragraph applies to solicitations in person. In ad-dition to meeting the requirements of §25.474(e)(8) of this title, beforeobtaining a signature from an applicant or customer who is being en-rolled in prepaid service, a REP must [shall] provide the applicant orcustomer a reasonable opportunity to read the PDS.

(g) Landlord as customer of record. A REP offering prepaidservice to multiple tenants at a location may designate the landlord asthe customer of record for the purpose of transactions with ERCOT andthe TDU.

(1) For each ESI ID for which the REP chooses to designatethe landlord as the customer of record, the REP must [shall] provideto the TDU the name, service and mailing addresses, and ESI ID, andkeep that information updated as required in the TDU's Tariff for RetailDelivery Service.

(2) The REP must [shall] treat each end-use consumer as acustomer for purposes of this subchapter, including §25.471 of this title(relating to General Provisions of Customer Protection Rules). Noth-ing in this subsection affects a REP's responsibility to provide customerbilling contact information to ERCOT in the format required by ER-COT.

(h) Summary of usage and payment (SUP).

(1) A REP must [shall] provide a SUP to each customerupon the customer's request within three business days of receipt ofthe request. The SUP must [shall] be delivered by an electronic meansof communications that provides a downloadable and printable recordof the SUP or, if the customer requests, by the United States PostalService. If a customer requests a paper copy of the SUP, a REP maycharge a fee for the SUP, which must be specified in the TOS and PDS


provided to the customer. For purposes of the SUP, a billing cycle must[shall] conform to a calendar month.

(2) A SUP must [shall] include the following information:

(A) the certified name and address of the REP and thenumber of the license issued to the REP by the commission;

(B) a toll-free telephone number, in bold-face type, thatthe customer can call during specified hours for questions and com-plaints to the REP about the SUP;

(C) the name, meter number, account number, ESI IDof the customer, and the service address of the customer;

(D) the dates and amounts of payments made during theperiod covered by the summary;

(E) a statement of the customer's consumption andcharges by calendar month during the period covered by the summary;

(F) an itemization of non-recurring charges, includingreturned check fees and reconnection fees; and

(G) the average price for electric service for each calen-dar month included in the SUP. The average price for electric servicemust [shall] reflect the total of all fixed and variable recurring charges,but not including state and local sales taxes, reimbursement for thestate miscellaneous gross receipts tax, and any nonrecurring chargesor credits, divided by the kilowatt-hour consumption, and must [shall]be expressed as a cents per kilowatt-hour amount rounded to the near-est one-tenth of one cent.

(3) If a REP separately identifies a charge defined by oneof the terms in this paragraph on the customer's SUP, then the term inthis paragraph must be used to identify the charge, and such term andits definition must [shall] be easily located on the REP's website andavailable to a customer free of charge upon request. Nothing in theparagraph precludes a REP from aggregating TDU or REP charges.For any TDU charge(s) listed in this paragraph, the amount billed bythe REP must [shall] not exceed the amount of the TDU charge(s). Thelabel for any TDU charge(s) may also identify the TDU that issued thecharge(s). A REP may use a different term than a defined term byadding or deleting a suffix, adding the word "total" to a defined term,where appropriate, changing the use of lower-case or capital letters orpunctuation, or using the acceptable abbreviation specified in this para-graph for a defined term. If an abbreviation other than the acceptableabbreviation is used for the term, then the term must also be identifiedon the customer's SUP.

(A) Advanced metering charge -- A charge assessed torecover a TDU's charges for Advanced Metering Systems, to the ex-tent that they are not recovered in a TDU's standard metering charge.Acceptable abbreviation: Advanced Meter.

(B) Competition Transition Charge -- A charge as-sessed to recover a TDU's charges for nonsecuritized costs associatedwith the transition to competition. Acceptable abbreviation: Competi-tion Transition.

(C) Energy Efficiency Cost Recovery Factor -- Acharge assessed to recover a TDU's costs for energy efficiencyprograms, to the extent that the TDU charge is a separate chargeexclusively for that purpose that is approved by the Public UtilityCommission. Acceptable abbreviation: Energy Efficiency.

(D) Late Payment Penalty -- A charge assessed for latepayment in accordance with Public Utility Commission rules.

(E) Meter Charge -- A charge assessed to recover aTDU's charges for metering a customer's consumption, to the extent

that the TDU charge is a separate charge exclusively for that purposethat is approved by the Public Utility Commission.

(F) Miscellaneous Gross Receipts Tax Reimbursement-- A fee assessed to recover the miscellaneous gross receipts tax im-posed on retail electric providers operating in an incorporated city ortown having a population of more than 1,000. Acceptable abbrevia-tion: Gross Receipts Reimb.

(G) Nuclear Decommissioning Fee -- A charge as-sessed to recover a TDU's charges for decommissioning of nucleargenerating sites. Acceptable abbreviation: Nuclear Decommission.

(H) PUC Assessment -- A fee assessed to recover thestatutory fee for administering the Public Utility Regulatory Act.

(I) Sales tax -- Sales tax collected by authorized taxingauthorities, such as the state, cities and special purpose districts.

(J) TDU Delivery Charges -- The total amounts as-sessed by a TDU for the delivery of electricity to a customer overpoles and wires and other TDU facilities not including discretionarycharges.

(K) Transmission Distribution Surcharges -- One ormore TDU surcharge(s) on a customer's bill in any combination. Sur-charges include charges billed as tariff riders by the TDU. Acceptableabbreviation: TDU Surcharges.

(L) Transition Charge -- A charge assessed to recovera TDU's charges for securitized costs associated with the transition tocompetition.

(4) If the REP includes any of the following terms in itsSUP, the term must [shall] be applied in a manner consistent with thedefinitions, and such term and its definition must [shall] be easily lo-cated on the REP's website and available to a customer free of chargeupon request:

(A) Base Charge -- A charge assessed during eachbilling cycle of service without regard to the customer's demand orenergy consumption.

(B) Demand Charge -- A charge based on the rate atwhich electric energy is delivered to or by a system at a given instant,or averaged over a designated period during the billing cycle.

(C) Energy Charge -- A charge based on the electric en-ergy (kWh) consumed.

(5) Unless a shorter time period is specifically requested bythe customer, information provided must [shall] be for the most recent12 months, or the longest period available if the customer has takenprepaid service from the REP for less than 12 months.

(6) In accordance with §25.472(b)(1)(D) of this title, a REPmust [shall] provide a SUP to an energy assistance agency within onebusiness day of receipt of the agency's request, and must [shall] notcharge the agency for the SUP.

(i) Deferred payment plans. A deferred payment plan for acustomer taking prepaid service is an agreement between the REP anda customer that requires a customer to pay a negative current balanceover time. A deferred payment plan may be established in person, bytelephone, or online, but all deferred payment plans must [shall] beconfirmed in writing by the REP to the customer.

(1) The REP must [shall] place a residential customer on adeferred payment plan, at the customer's request:

(A) when the customer's current balance reflects a neg-ative balance of $50 or more during an extreme weather emergency, as


defined in §25.483(j)(1) of this title, if the customer makes the requestwithin one business day after the weather emergency has ended; or

(B) during a state of disaster declared by the governorpursuant to Texas Government Code §418.014 if the customer is in anarea covered by the declaration and the commission directs that de-ferred payment plans be offered.

(2) The REP must [shall] offer a deferred payment plan toa residential customer who has been underbilled by $50 or more forreasons other than theft of service.

(3) The REP may offer a deferred payment plan to a cus-tomer who has expressed an inability to pay.

(4) The deferred payment planmust [shall] include both thenegative current balance and the connection balance.

(5) The customer has the right to satisfy the deferred pay-ment plan before the prescribed time.

(6) The REP may require that:

(A) no more than 50% of each transaction amount beapplied towards the deferred payment plan; or

(B) an initial payment of no greater than 50% of theamount due be made, with the remainder of the deferred amount paidin installments. The REP must [shall] inform the customer of the rightto pay the remaining deferred balance by reducing the deferred balanceby five equal monthly installments. However, the customer can agreeto fewer or more frequent installments. The installments to repay thedeferred balance must [shall] be applied to the customer's account on aspecified day of each month.

(7) The REP may initiate disconnection of service if thecustomer does not meet the terms of a deferred payment plan or if thecustomer's current balance falls below the disconnection balance, ex-cluding the remaining deferred amount. However, the REPmust [shall]not initiate disconnection of service unless it has provided the customerat least one day's notice that the customer has not met the terms of theplan or, pursuant to subsection (c)(7)(D) of this section, a timely no-tice that the customer's current balance was estimated to fall below thedisconnection balance, excluding the remaining deferred amount.

(8) The REP may apply a switch-hold while the customeris on a deferred payment plan.

(9) A copy of the deferred payment plan must [shall] beprovided to the customer.

(A) The plan must [shall] include a statement, in clearand conspicuous type, that states, "If you have any questions regardingthe terms of this agreement, or if the agreement was made by telephoneand you believe this does not reflect your understanding of that agree-ment, contact (insert name and contact number of REP)."

(B) If a switch-hold will apply, the plan must [shall] in-clude a statement, in a clear and conspicuous type, that states "By enter-ing into this agreement, you understand that {company name} will puta switch-hold on your account. A switch-hold means that you will notbe able to buy electricity from other companies until you pay this pastdue amount. The switch-hold will be removed after your final paymenton this past due amount is processed. While a switch-hold applies, ifyou are disconnected for not paying, you will need to pay {us or com-pany name}, to get your electricity turned back on."

(C) If the customer and the REP's representative oragent meet in person, the representative must [shall] read to thecustomer the statement in subparagraph (A) of this paragraph and, ifapplicable, the statement in subparagraph (B) of this paragraph.

(D) The plan may include a one-time penalty in accor-dance with §25.480(c) of this title, but must [shall] not include a financecharge.

(E) The plan must [shall] include the terms for paymentof deferred amounts, consistent with paragraph (6) of this subsection.

(F) The plan must [shall] state the total amount to bepaid under the plan.

(G) The plan must [shall] state that a customer's elec-tric service may be disconnected if the customer does not fulfill theterms of the deferred payment plan, or if the customer's current bal-ance falls below the disconnection balance, excluding the remainingdeferred amount.

(10) The REP must [shall] not charge the customer a feefor placing the customer on a deferred payment plan.

(11) The REP, through a standard market process, must[shall] submit a request to remove the switch-hold, pursuant to§25.480(m)(2) of this title if the customer pays the deferred balanceowed to the REP. On the day the REP submits the request to removethe switch-hold, the REP must [shall] notify the customer that the cus-tomer has satisfied the deferred payment plan and that the switch-holdis being removed.

(j) Disconnection of service. As provided by subsection (a)(4)of this section, §25.483 (b)(2)(A) and (B), (d), (e)(1)-(6), and the defi-nition of extreme weather in §25.483(j)(1) of this title apply to prepaidservice. In addition to those provisions, this subsection applies to dis-connection of a customer receiving prepaid service.

(1) Prohibition on disconnection. A REP must [shall] notinitiate disconnection for a customer's failure to maintain a current bal-ance above the disconnection balance on a weekend day or during anyperiod during which the mechanisms used for payments specified in thecustomer's PDS are unavailable; or during an extreme weather emer-gency, as this term is defined in §25.483 of this title, in the county inwhich the service is provided.

(2) Initiation of disconnection. A REP may initiate discon-nection of service when the current balance falls below the disconnec-tion balance, but only if the REP provided the customer a timely warn-ing pursuant to subsection (c)(7)(D) of this section; or when a customerfails to comply with a deferred payment plan, but only if the REP pro-vided the customer a timely warning pursuant to subsection (i)(7) ofthis section. A REP may initiate disconnection if the customer's cur-rent balance falls below the disconnection balance due to reversal of apayment found to have insufficient funds available or is otherwise re-jected by a bank, credit card company, or other payor.

(3) Pledge from electric assistance agencies. If a REP re-ceives a pledge, letter of intent, purchase order, or other commitmentfrom an energy assistance agency to make a payment for a customer,the REP must [shall] immediately credit the customer's current balancewith the amount of the pledge.

(A) The REP must [shall] not initiate disconnection ofservice if the pledge from the energy assistance agency (or energy as-sistance agencies) establishes a current balance above the customer'sdisconnection balance or, if the customer has been disconnected, must[shall] request reconnection of service if the pledge from the energy as-sistance agency establishes a current balance for the customer that is ator above the customer's connection balance required for reconnection.

(B) The REP may initiate disconnection of service ifpayment from the energy assistance agency is not received within 45days of the REP's receipt of the commitment or if the payment is notsufficient to satisfy the customer's disconnection balance in the case of


a currently energized customer, or the customer's connection balance ifthe customer has been disconnected for falling below the disconnectionbalance.

(4) Reconnection of service. Within one hour of a customerestablishing a connection balance or any otherwise satisfactory correc-tion of the reasons for disconnection, the REP must [shall] request thatthe TDU reconnect service or, if the REP disconnected service usingits CPDS, reconnect service. The REP's payment mechanism may in-clude a requirement that the customer verify the payment using a card,code, or other similar method in order to establish a connection balanceor current balance above the disconnection balance when payment ismade to a third-party processor acting as an agent of the REP.

(k) Service to Critical Care Residential Customers andChronic Condition Residential Customers. A REP must [shall] notknowingly provide prepaid service to a customer who is a critical careresidential customer or chronic condition residential customer as thoseterms are defined in §25.497 of this title. In addition, a REP must[shall] not enroll an applicant who states that the applicant is a criticalcare residential customer or chronic condition residential customer.

(1) If the REP is notified by the TDU that a customer re-ceiving prepaid service is designated as a critical care residential cus-tomer or chronic condition residential customer, the REP must [shall]diligently work with the customer to promptly transition the customerto postpaid service or another REP in a manner that avoids a servicedisruption. The REP must [shall] not charge the customer a fee for thetransition, including an early termination or disconnection fee.

(2) If the customer is unresponsive, the REP must [shall]transfer the customer to a competitively offered, month-to-month post-paid product at a rate no higher than the rate calculated pursuant to§25.43(l)(2)(A) of this title. The REP must [shall] provide the cus-tomer notice that the customer has been transferred to a new productand must [shall] provide the customer the new product's Terms of Ser-vice and Electricity Facts Label.

(l) Compliance period. No later than October 1, 2011, prepaidservice offered by a REP pursuant to a new contract to a customer beingserved using a "settlement provisioned meter," as that term is definedin Chapter 1 of the TDU's tariff for retail delivery service, or using aREP-controlled collar or meter must [shall] comply with this section.Before October 1, 2011, prepaid service offered by a REP to a customerserved using a settlement provisioned meter or REP-controlled collaror meter must [shall] comply with this section as it currently exists or asit existed in 2010, except as provided in subsection (m) of this section.

(m) Transition of Financial Prepaid Service Customers. AREP may continue to provide a financial prepaid service (i.e., one thatdoes not use a settlement provisioned meter or REP-controlled collaror meter) only to its customer that was receiving financial prepaidservice at a particular location on October 1, 2011. A customer who isserved by a financial prepaid service must [shall] be transitioned to aservice that complies with the other subsections of this section by thelater of October 1, 2011 or sixty days after the customer begins to beserved using either a settlement provisioned meter or a REP-controlledcollar or meter. The customer must [shall] be notified by the REP thatthe customer's current prepaid service will no longer be offered as of adate specified by the REP by the later of either October 1, 2011 or sixtydays after the customer begins to be served using either a settlementprovisioned meter or REP-controlled collar or meter, as applicable.The REP must [shall] provide the notification no sooner than 60 daysand not less than 30 days prior to the termination of the customer'scurrent prepaid service. The customer must [shall] be notified that thecustomer will be moved to a new prepaid service, and the REP must

[shall] transmit an EFL and PDS to the customer with the notification,if the customer does not choose another service or REP.

§25.499. Acknowledgement of Risk Requirements for Certain Com-mercial Contracts.

(a) Purpose. This section establishes requirements for the of-fering of wholesale indexed products and products containing separateassessment of ancillary services costs to a customer other than a resi-dential or small commercial customer.

(b) Application. This section applies to all retail electricproviders (REPs), aggregators and brokers. This section is effectivefor enrollments or re-enrollments entered into on or after September1, 2021. REPs are not required to modify contract documents relatedto contracts or enrollments entered into before this date.

(c) Definitions. The definitions set forth in §25.5 of this title(relating to Definitions) and §25.471(d) of this title (relating to GeneralProvisions of Customer Protection Rules) apply to this section. In ad-dition, wholesale indexed product, when used in this section, means aretail electric product in which the price a customer pays for electric-ity includes a direct pass-through of real-time settlement point pricesdetermined by the independent organization certified under the PublicUtility Regulatory Act (PURA) §39.151 for the ERCOT power region.

(d) Acknowledgement of Risk (AOR). Before a customerother than a residential or small commercial customer is enrolled ina wholesale indexed product, or a product that contains a separateassessment of ancillary service charges, an aggregator, broker, orREP must obtain an AOR, signed by the customer, verifying that thecustomer accepts the potential price risks associated with the product.

(1) For Wholesale Indexed Products, the AOR mustinclude the following statement in clear, boldfaced text: "I understandthat the volatility and fluctuation of wholesale energy pricing maycause my energy bill to be multiple times higher in a month in whichwholesale energy prices are high. I understand that I will be responsi-ble for charges caused by fluctuations in wholesale energy prices."

(2) For products that contain a separate assessment of an-cillary service charges the AOR must include the following statementin clear, boldfaced text: "I understand that my energy bill may includea separate assessment of ancillary service charges, which may causemy energy bill to be multiple times higher in a month in which ancil-lary services charges are high. I understand that I will be responsiblefor charges caused by fluctuations in ancillary service charges."

(3) AnAORmay be included as an addendum to a contract.

(4) A REP, aggregator, or broker must retain a record ofthe AORs for each customer during the time the applicable plan is ineffect and for four years after the contract ceases to be in effect for anycustomer. A REP must provide such documents at the request of thecommission or its staff.


Filed with the Office of the Secretary of State on August 2, 2021.TRD-202102997Andrea GonzalezRules CoordinatorPublic Utility Commission of TexasEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 936-7244

♦ ♦ ♦


PART 4. TEXAS DEPARTMENT OFLICENSING AND REGULATIONCHAPTER 85. VEHICLE STORAGEFACILITIES16 TAC §85.722The Texas Department of Licensing and Regulation (Depart-ment) proposes amendments to existing rules at 16 TexasAdministrative Code (TAC), Chapter 85, §85.722, regarding theVehicle Storage Facilities Program. These proposed changesare referred to as "proposed rule."EXPLANATION OF AND JUSTIFICATION FOR THE RULEThe rules under 16 TAC Chapter 85 implement Texas Occupa-tions Code, Chapter 2303, Vehicle Storage Facilities.The proposed rule addresses the maximum amounts for vehiclestorage and impoundment fees that may be charged by a vehiclestorage facility company. The proposed rule increases the allow-able vehicle storage facility impoundment fee and daily storagefees in accordance with changes in the Consumer Price Index(CPI) during the preceding state fiscal biennium, as authorizedby statute. Pursuant to Texas Occupations Code §2303.1552,the Texas Commission of Licensing and Regulation (Commis-sion) is authorized to adjust the vehicle impound and storagefees based upon changes in the CPI not later than November1 of every odd-numbered year. The proposed rule, based uponanalysis of the CPI during the preceding state fiscal bienniumby Department staff, is necessary to comply with the statutoryrequirements to implement changes in the vehicle impound andstorage fees for 2021.The proposed rule was presented to and discussed by the Tow-ing and Storage Advisory Board at its meeting on July 29, 2021.The Advisory Board did not make any changes to the proposedrule. The Advisory Board voted and recommended that the pro-posed rule be published in the Texas Register for public com-ment.SECTION-BY-SECTION SUMMARYThe proposed rule amends §85.722(d) by reflecting the newmaximum amounts for daily storage fees that may be chargedby a vehicle storage facility in connection with receipt andstorage of a vehicle, as authorized by statute.The proposed rule amends §85.722(e) by reflecting the newmaximum amount for the vehicle impoundment fee that maybe charged by a vehicle storage facility in connection with im-poundment and custody of a vehicle, as authorized by statute.FISCAL IMPACT ON STATE AND LOCAL GOVERNMENTTony Couvillon, Policy Research and Budget Analyst, has deter-mined that for each year of the first five years the proposed rulesare in effect, there are no estimated additional costs or reduc-tions in costs to state or local government as a result of enforcingor administering the proposed rules.Mr. Couvillon has determined that for each year of the first fiveyears the proposed rule is in effect, there is no estimated in-crease or loss in revenue to the state or local government as aresult of enforcing or administering the proposed rules.LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rule will not af-fect the local economy, so the agency is not required to preparea local employment impact statement under Government Code§2001.022.PUBLIC BENEFITSMr. Couvillon also has determined that for each year of the firstfive-year period the proposed rule is in effect, the public ben-efit will be putting consumers on notice of the increase in feesthat would be incurred if a towed vehicle is stored at a VSF. Theproposed rule updates the allowable fees for storage and im-poundment of vehicles based on the percentage increase in theConsumer Price Index during the previous state fiscal biennium,as authorized by statute. The increase in fees allows vehiclestorage facilities to keep pace with inflation and current costs foroperating such a facility.PROBABLE ECONOMIC COSTS TO PERSONS REQUIREDTO COMPLY WITH PROPOSALMr. Couvillon has determined that for each year of the first five-year period the proposed rule is in effect, there will be addi-tional costs to persons who are required to comply with the pro-posed rules. The statutorily authorized increase in the amountof fees allowed to be charged for vehicle storage and impound-ment would have an increased economic cost on those who payto have a stored vehicle released from a vehicle storage facility.However, the maximum additional amount a person would be re-quired to pay is $0.78 or $1.08 on the first day, depending on thesize of the vehicle, and $0.39 or $0.69 each day afterward. Thissmall increase would have a minimal effect, if at all.FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSI-NESSES, AND RURAL COMMUNITIESThere will be no adverse economic effect on small businesses,micro-businesses, or rural communities as a result of the pro-posed rules. Since the agency has determined that the proposedrule will have no adverse economic effect on small businesses,micro-businesses, or rural communities, preparation of an Eco-nomic Impact Statement and a Regulatory Flexibility Analysis,as detailed under Texas Government Code §2006.002, are notrequired.ONE-FOR-ONE REQUIREMENT FOR RULESWITH A FISCALIMPACTThe proposed rule does not have a fiscal note that imposes acost on regulated persons, including another state agency, aspecial district, or a local government. Therefore, the agency isnot required to take any further action under Government Code§2001.0045.GOVERNMENT GROWTH IMPACT STATEMENTPursuant to Government Code §2001.0221, the agency providesthe following Government Growth Impact Statement for the pro-posed rules. For each year of the first five years the proposedrules will be in effect, the agency has determined the following:1. The proposed rule does not create or eliminate a governmentprogram.2. Implementation of the proposed rule does not require the cre-ation of new employee positions or the elimination of existingemployee positions.3. Implementation of the proposed rule does not require anincrease or decrease in future legislative appropriations to theagency.


4. The proposed rule does not require an increase or decreasein fees paid to the agency.5. The proposed rule does not create a new regulation.6. The proposed rule does not expand, limit, or repeal an existingregulation.7. The proposed rule does not increase or decrease the numberof individuals subject to the rules' applicability.8. The proposed rule does not positively or adversely affect thisstate's economy.TAKINGS IMPACT ASSESSMENTThe Department has determined that no private real property in-terests are affected by the proposed rules and the proposed ruledoes not restrict, limit, or impose a burden on an owner's rightsto his or her private real property that would otherwise exist inthe absence of government action. As a result, the proposedrule does not constitute a taking or require a takings impact as-sessment under Government Code §2007.043.PUBLIC COMMENTSComments on the proposed rule may be submit-ted electronically on the Department's website athttps://ga.tdlr.texas.gov:1443/form/gcerules; by facsimileto (512) 475-3032; or by mail to Vanessa Vasquez, LegalAssistant, Texas Department of Licensing and Regulation, P.O.Box 12157, Austin, Texas 78711. The deadline for comments is30 days after publication in the Texas Register.STATUTORY AUTHORITYThe proposed rule is proposed under Texas Occupations Code,Chapters 51 and 2303, which authorize the Texas Commissionof Licensing and Regulation, the Department's governing body,to adopt rules as necessary to implement these chapters and anyother law establishing a program regulated by the Department.The statutory provisions affected by the proposed rule are thoseset forth in Texas Occupations Code, Chapters 51 and 2303. Noother statutes, articles, or codes are affected by the proposedrule.§85.722. Responsibilities of Licensee--Storage Fees and OtherCharges.

(a) For the purposes of this section, "VSF" includes a garage,parking lot, or other facility that is:

(1) owned by a governmental entity; and

(2) used to store or park at least 10 vehicles each year.

(b) The fees outlined in this section have precedence over anyconflicting municipal ordinance or charter provision.

(c) Notification fee.

(1) A VSF may not charge a vehicle owner or authorizedrepresentative more than $50 for notification under these rules. If anotification must be published, and the actual cost of publication ex-ceeds 50% of the notification fee, the VSF may recover the additionalamount of the cost of publication. The publication fee is in addition tothe notification fee.

(2) If a vehicle is removed by the vehicle owner or autho-rized representative within 24 hours after the date the VSF receives thevehicle, notification is not required by these rules.

(3) If a vehicle is removed by the vehicle owner or autho-rized representative before notification is sent or within 24 hours fromthe time VSF receives the vehicle, the VSF may not charge a notifica-tion fee to the vehicle owner.

(d) Daily storage fee. A VSF may charge $20 for each day orpart of a day for storage of a vehicle that is 25 feet or less in length andmay charge $35 for each day or part of a day for storage of a vehiclethat exceeds 25 feet in length, subject to a biennial adjustment as setforth in Texas Occupations Code §2303.1552(b)(1).

(1) Per the 2021 [2019] biennial adjustment, the maximumamount that a VSF may charge for a daily storage fee is as follows:

(A) Vehicle that is 25 feet or less in length: $21.03[$20.64].

(B) Vehicle that exceeds 25 feet in length: $36.80[$36.11].

(2) A daily storage fee may be charged for any part of theday, except that a daily storage fee may not be charged for more thanone day if the vehicle remains at the VSF less than 12 hours. In thisparagraph a day is considered to begin and end at midnight.

(3) A VSF that has accepted into storage a vehicle regis-tered in this state shall not charge for more than five days of storagefees until a notice, as prescribed in §85.703 of these rules, is mailed orpublished.

(4) A VSF that has accepted into storage a vehicle not reg-istered in Texas shall not charge for more than five days of storagebefore the date the request for owner information is sent to the appro-priate governmental entity or to the private entity authorized by thatgovernmental entity to obtain title, registration, and lienholder infor-mation using a single vehicle identification inquiry.

(5) A VSF shall charge a daily storage fee after notice, asprescribed in §85.703, is mailed or published for each day or portionof a day the vehicle is in storage until the vehicle is removed and allaccrued charges are paid.

(e) Impoundment fee. A VSF may charge a vehicle owneror authorized representative an impoundment fee of $20, subjectto a biennial adjustment as set forth in Texas Occupations Code§2303.1552(b)(1). Per the 2021 [2019] biennial adjustment, themaximum amount that a VSF may charge for an impoundment feeis $21.03 [$20.64]. If the VSF charges a fee for impoundment, thewritten bill for services must specify the exact services performed forthat fee and the dates those services were performed.

(f) Governmental or law enforcement fees. AVSFmay collectfrom a vehicle owner or authorized representative any fee that must bepaid to a law enforcement agency, the agency's authorized agent, or agovernmental entity.

(g) Additional fees. A VSF may not charge additional fees re-lated to the storage of a vehicle other than fees authorized by these rulesor a nonconsent-towing fee authorized by Texas Occupations Code,§2308.2065.


Filed with the Office of the Secretary of State on July 30, 2021.TRD-202102980


Brad BowmanGeneral CounselTexas Department of Licensing and RegulationEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 463-3671

♦ ♦ ♦CHAPTER 86. VEHICLE TOWING ANDBOOTING16 TAC §86.455The Texas Department of Licensing and Regulation (Depart-ment) proposes amendments to an existing rule at 16 TexasAdministrative Code (TAC), Chapter 86, §86.455, regarding theVehicle Towing and Booting Program. The proposed changesare referred to as "proposed rule."EXPLANATION OF AND JUSTIFICATION FOR THE RULEThe rules under 16 TAC Chapter 86 implement Texas Occupa-tions Code, Chapter 2308, Vehicle Towing and Booting.The proposed rule addresses the maximum amounts for privateproperty tows and drop fees that may be charged by a tow-ing company. Pursuant to Occupations Code §2308.0575, theTexas Commission of Licensing and Regulation (Commission) isrequired to biennially contract for a fee study which examines pri-vate property towing fees assessed by towing companies basedon factors such as: (1) the costs of company towing services; (2)changes in the Consumer Price Index for All Urban Consumers(CPI-U); (3) the geographic area, in this instance, a specific focuson the urban consumers for the U.S. South Region; and (4) in-dividual cost components, including the CPI-U for motor vehiclemaintenance and repair and the CPI-U for motor vehicle insur-ance and state gasoline prices. The proposed rule is based uponfindings from the 2020 fee study and is necessary to comply withthe statutory requirements to implement the biennial adjustmentof fees for 2021, in order to protect public health and safety ofconsumers.The proposed rule was presented to and discussed by the Tow-ing and Storage Advisory Board at its meeting on July 29, 2021.The Advisory Board did not make any changes to the proposedrule. The Advisory Board voted and recommended that the pro-posed rule be published in the Texas Register for public com-ment.SECTION-BY-SECTION SUMMARYThe proposed rule amends §86.455(b), by reflecting the newmaximumamounts for private property tows that may be chargedby a towing company in connection with a private property tow,as determined by the 2020 fee study required by statute.The proposed rule amends §86.455(c), by reflecting the newmaximum amounts for motor vehicle drop charges that may becharged by a towing company in connection with a private prop-erty tow prior to its removal from the premises or parked location,as determined by the 2020 fee study required by statute.FISCAL IMPACT ON STATE AND LOCAL GOVERNMENTTony Couvillon, Policy Research and Budget Analyst, has deter-mined that for each year of the first five years the proposed ruleis in effect, there are no estimated additional costs or reductionsin costs to state or local government as a result of enforcing oradministering the proposed rule.

Mr. Couvillon has determined that for each year of the first fiveyears the proposed rule is in effect, there is no estimated in-crease or loss in revenue to the state or local government as aresult of enforcing or administering the proposed rule.LOCAL EMPLOYMENT IMPACT STATEMENTMr. Couvillon has determined that the proposed rule will not af-fect the local economy, so the agency is not required to preparea local employment impact statement under Government Code§2001.022.PUBLIC BENEFITSMr. Couvillon also has determined that for each year of the firstfive-year period the proposed rule is in effect, the public bene-fit will be that the rule allows towing companies to adjust theirprivate property tow fees to keep pace with inflation and currenttow company costs. The fee changes help tow companies to bemore financially secure in their operations and the rule also putsthe public on notice of the fees that could be incurred if a vehicleis subject to a private property tow.PROBABLE ECONOMIC COSTS TO PERSONS REQUIREDTO COMPLY WITH PROPOSALMr. Couvillon has determined that for each year of the first five-year period the proposed rule is in effect, there will be additionalcosts to persons who are required to comply with the proposedrule. The statutorily required change in the amount of fees thatmay be charged for a private property tow could have an eco-nomic impact on some members of the general public who havea vehicle towed through a private property tow, or who requestthe release of a hooked-up vehicle prior to it being towed. How-ever, having to pay an increased fee may be avoided by mem-bers of the public through compliance with all parking require-ments at private parking facilities and therefore not being subjectto a tow and its associated fees.FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSI-NESSES, AND RURAL COMMUNITIESThere will be no adverse economic effect on small businesses,micro-businesses, or rural communities as a result of the pro-posed rule. Since the agency has determined that the proposedrule will have no adverse economic effect on small businesses,micro-businesses, or rural communities, preparation of an Eco-nomic Impact Statement and a Regulatory Flexibility Analysis,as detailed under Texas Government Code §2006.002, is notrequired.ONE-FOR-ONE REQUIREMENT FOR RULESWITH A FISCALIMPACTThe proposed rule does not have a fiscal note that imposes acost on regulated persons, including another state agency, aspecial district, or a local government. Therefore, the agency isnot required to take any further action under Government Code§2001.0045.GOVERNMENT GROWTH IMPACT STATEMENTPursuant to Government Code §2001.0221, the agency providesthe following Government Growth Impact Statement for the pro-posed rule. For each year of the first five years the proposedrule will be in effect, the agency has determined the following:1. The proposed rule does not create or eliminate a governmentprogram.


2. Implementation of the proposed rule does not require the cre-ation of new employee positions or the elimination of existingemployee positions.3. Implementation of the proposed rule does not require anincrease or decrease in future legislative appropriations to theagency.4. The proposed rule does not require an increase or decreasein fees paid to the agency.5. The proposed rule does not create a new regulation.6. The proposed rule does not expand, limit, or repeal an existingregulation.7. The proposed rule does not increase or decrease the numberof individuals subject to the rule's applicability.8. The proposed rule does not positively or adversely affect thisstate's economy.TAKINGS IMPACT ASSESSMENTThe Department has determined that no private real property in-terests are affected by the proposed rule and the proposed ruledoes not restrict, limit, or impose a burden on an owner's rightsto his or her private real property that would otherwise exist inthe absence of government action. As a result, the proposedrule does not constitute a taking or require a takings impact as-sessment under Government Code §2007.043.PUBLIC COMMENTSComments on the proposed rule may be submit-ted electronically on the Department's website athttps://ga.tdlr.texas.gov:1443/form/gcerules; by facsimileto (512) 475-3032; or by mail to Vanessa Vasquez, LegalAssistant, Texas Department of Licensing and Regulation, P.O.Box 12157, Austin, Texas 78711. The deadline for comments is30 days after publication in the Texas Register.STATUTORY AUTHORITYThe proposed rule is proposed under Texas Occupations Code,Chapters 51 and 2308, which authorize the Texas Commissionof Licensing and Regulation, the Department's governing body,to adopt rules as necessary to implement these chapters and anyother law establishing a program regulated by the Department.The statutory provisions affected by the proposed rule are thoseset forth in Texas Occupations Code, Chapters 51 and 2308. Noother statutes, articles, or codes are affected by the proposedrule.§86.455. Private Property Tow Fees.

(a) For purposes of this section:

(1) light-duty means the tows of motor vehicles with agross weight rating of 10,000 pounds or less;

(2) medium-duty means the tows of motor vehicles with agross weight rating of more than 10,000 pounds, but less than 25,000pounds; [and]

(3) heavy-duty means the tows of motor vehicles with agross weight rating that exceeds 25,000 pounds; and

(4) drop charge means the maximum that may be chargedfor the release of the vehicle before its removal from the property orparked location.

(b) The maximum amount that may be charged for privateproperty tows is as follows:

(1) light-duty [light duty] tows--$272 [$255];

(2) medium-duty [medium duty] tows--$380 [$357]; and

(3) heavy-duty [heavy duty] tows--$489 [$459] per unit ora maximum of $978 [$918].

(c) If the owner, authorized operator, or authorized agent ofthe owner of a motor vehicle that is parked without the authorizationof the property owner attempts to retrieve the motor vehicle before itsremoval from the property or parked location, the maximum amountthat may be charged for a drop charge (if the motor vehicle is hookedup) is:

(1) light-duty [light duty] tows--$135 [$127];

(2) medium-duty [medium duty] tows--$190 [$178]; and

(3) heavy-duty [heavy duty] tows--$244 [$229].

(d) If an owner, authorized operator, or authorized agent ofthe owner of a motor vehicle is present before the removal from theproperty or parked location the towing operator shall advise the owner,authorized operator, or authorized agent of the owner of amotor vehiclethat he or she may offer payment of the towing drop charge.

(e) For purposes of this section, a tow company must acceptcash, credit cards and debit cards as payment for the drop charge.


Filed with the Office of the Secretary of State on July 30, 2021.TRD-202102981Brad BowmanGeneral CounselTexas Department of Licensing and RegulationEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 463-3671

♦ ♦ ♦PART 8. TEXAS RACINGCOMMISSIONCHAPTER 303. GENERAL PROVISIONSSUBCHAPTER D. TEXAS BRED INCENTIVEPROGRAMSDIVISION 3. PROGRAMS FORGREYHOUNDS16 TAC §303.102The Texas Racing Commission ("the Commission") proposesamendments to 16 TAC §303.102, Greyhound Rules. The pro-posed amendments would allow for the Texas Greyhound Asso-ciation (TGA), rather than the National Greyhound Association,to register greyhounds as Texas-bred. These amendments wererequested by the TGA as a cost-savingmeasure for its members.FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERN-MENTChuck Trout, Executive Director, has determined that for the firstfive-year period the amendments are in effect, there will be nofiscal implications for local or state government as a result of en-forcing the amendments. Enforcing or administering the amend-


ments does not have foreseeable implications relating to cost orrevenues of the state or local governments.ANTICIPATED PUBLIC BENEFIT AND COSTMr. Trout has determined that for each year of the first five yearsthat the amendments are in effect, the anticipated public benefitwill be reduced cost to persons wishing to register Texas-bredgreyhounds. There is no probable economic cost to personsrequired to comply with the amendments.LOCAL EMPLOYMENT IMPACT STATEMENTMr. Trout has determined that the proposed amendments willnot adversely affect the local economy, so the agency is not re-quired to prepare a local employment impact statement underGovernment Code §2001.022.GOVERNMENT GROWTH IMPACT STATEMENTFor each year of the first five years that the proposed amend-ments are in effect, the government growth impact is as fol-lows: the amendments do not create or eliminate a governmentprogram; the amendments do not create any new employeepositions or eliminate any existing employee positions; imple-mentation of the amendments does not require an increase ordecrease in future legislative appropriations to the agency; theamendments do not require an increase or decrease in fees paidto the agency; the amendments do not create new regulations;the amendments do not expand existing regulations; the amend-ments do not repeal existing regulations; the amendments donot increase or decrease the number of individuals subject tothe rule's applicability; and the amendments are not expected tohave an adverse effect on this state's economy.EFFECT ON SMALL AND MICRO-BUSINESSESThe proposed amendments will have no adverse economiceffect on small or micro-businesses, and therefore preparationof an Economic Impact Statement and a Regulatory FlexibilityAnalysis is not required.IMPACT ON EMPLOYMENT CONDITIONSThere are no negative impacts upon employment conditions inthis state as a result of the proposed amendments.ADVERSE ECONOMIC EFFECT ON RURAL COMMUNITIESThere will be no adverse effect on rural communities as a resultof the proposed amendments. Because the agency has deter-mined that the proposed amendments will have no adverse eco-nomic effect on rural communities, preparation of an EconomicImpact Statement and a Regulatory Flexibility Analysis, as de-tailed under TexasGovernment Code §2006.002, is not required.REGULATORY ANALYSIS OF MAJOR ENVIRONMENTALRULESMr. Trout has determined that these proposed amendments donot constitute a "major environmental rule" as defined by Gov-ernment Code, §2001.0225. Accordingly, an environmental im-pact analysis is not required.TAKINGS IMPACT STATEMENTMr. Trout has determined that the proposed amendments will notaffect private real property and will not restrict, limit, or imposea burden on an owner's right to his or her private real propertyand, therefore, will not constitute a taking. As a result, a takingsimpact assessment is not required, as provided by GovernmentCode §2007.043.

EFFECT ON AGRICULTURAL, HORSE, AND GREYHOUNDINDUSTRIESThe proposed amendments will not have an adverse effect onthe state's agricultural, horse breeding, horse training, grey-hound breeding, or greyhound training industries.PUBLIC COMMENTSAll comments or questions regarding the proposed amendmentsmay be submitted in writing within 30 days following publica-tion of this notice in the Texas Register by mail to Robert El-rod, Public Information Officer for the Texas Racing Commis-sion, at P.O. Box 12080, Austin, Texas 78711-2080, by e-mail [email protected], by telephone to (512) 833-6699, or by faxto (512) 833-6907.STATUTORY AUTHORITYThe amendments are proposed under Tex. Occ. Code §2023.004, which authorizes the Commission to adopt rules toadminister the Act.No other statute, code, or article is affected by the proposedamendments.§303.102 Greyhound Rules

(a) Registration as a Texas-Bred Greyhound.

(1) - (2) (No change.)

(3) Registration Procedure.

(A) - (C) (No change.)

(D) If the litter qualifies to be registered as Texas-bredgreyhounds, the TGA will stamp the "Litter Registration Acknowl-edgement" and "Certificate of Registration" of each affected greyhoundas "Texas Bred" and return them [it] to the sender. [The TGA will no-tify the NGA of all litters registered as "Texas Bred".]

[(E) On notice that a litter has been registered as "TexasBred", the NGA will stamp the "Certificate of Registration" of eachaffected greyhound as "Texas Bred".]

(E) [(F)] A person who submits an application for reg-istration knowing that the application contains false information is sub-ject to discipline by the TGA Executive Committee, including suspen-sion from the TGA.

(b) - (d) (No change.)


Filed with the Office of the Secretary of State on July 28, 2021.TRD-202102915Chuck TroutExecutive DirectorTexas Racing CommissionEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 833-6699

♦ ♦ ♦TITLE 22. EXAMINING BOARDS

PART 9. TEXAS MEDICAL BOARDCHAPTER 174. TELEMEDICINE


SUBCHAPTER A. TELEMEDICINE22 TAC §174.5The Texas Medical Board (Board) proposes amendments to 22TAC §174.5, relating to the Issuance of Prescriptions.The amendments to §174.5(e) allow physicians to utilizetelemedicine to continue issuing previous prescription(s) forscheduled medications to established chronic pain patients,if the physician has, within the past 90 days, seen a patientin-person or via a telemedicine visit using two-way audio andvideo communication. The amendments will consistently andconveniently provide patients access to schedule drugs neededto ensure on-going treatment of chronic pain and avoid potentialadverse consequences associated with the abrupt cessation ofpain medication.Scott Freshour, General Counsel for the Texas Medical Board,has determined that, for each year of the first five years theamendments are in effect, the public benefit anticipated as a re-sult of enforcing the proposed amendments will be to allow physi-cians and other health care professionals to provide necessarymedical services to related to issuance of prescriptions includ-ing controlled substances for patients. The amendments elimi-nate the required travel to the physician or healthcare providerfor an in-person visit each time the patient needs a refill for painmedication and improves the overall continuity of care for thesepatients, while still meeting the standard of care and complyingwith state and federal law.Mr. Freshour has also determined that for the first five-year pe-riod the amendments are in effect, there will be no fiscal impactor effect on government growth as a result of enforcing the pro-posed amendments.Mr. Freshour has also determined that for the first five-year pe-riod these amendments are in effect there will be no probableeconomic cost to individuals required to comply with these pro-posed amendments.Pursuant to Texas Government Code §2006.002, the agencyprovides the following economic impact statement for these pro-posed amendments and determined that for each year of thefirst five years the amendments will be in effect, there will be noeffect on small businesses, micro businesses, or rural communi-ties. The agency has considered alternative methods of achiev-ing the purpose of the proposed amendments and found none.Pursuant to Texas Government Code §2001.024(a)(4), Mr.Freshour certifies that this proposal has been reviewed and theagency has determined that for each year of the first five yearsthe amendments are in effect:(1) there is no additional estimated cost to the state or to localgovernments expected as a result of enforcing or administeringthe proposed amendments;(2) there is no estimated reduction in costs to the state or tolocal governments as a result of enforcing or administering theproposed amendments;(3) there is no estimated loss or increase in revenue to the stateor to local governments as a result of enforcing or administeringthe proposed amendments; and(4) there is no foreseeable implication relating to cost or rev-enues of the state or local governments with regard to enforcingor administering the proposed amendments.

Pursuant to Texas Government Code §2001.024(a)(6) and§2001.022, the agency has determined that for each year of thefirst five years the amendments will be in effect, there will be noeffect on local economy and local employment.Pursuant to Government Code §2001.0221, the agency pro-vides the following Government Growth Impact Statement forthe amendments. For each year of the first five years theamendments will be in effect, Mr. Freshour has determined thefollowing:(1) The proposed amendments do not create or eliminate a gov-ernment program.(2) Implementation of the proposed amendments do not requirethe creation of new employee positions or the elimination of ex-isting employee positions.(3) Implementation of the proposed amendments do not requirean increase or decrease in future legislative appropriations to theagency.(4) The proposed amendments do not require an increase ordecrease in fees paid to the agency.(5) The proposed amendments do not create new regulations.(6) The proposed amendments do not repeal existing regula-tions. The proposed amendments do not expand or limit an ex-isting regulation.(7) The proposed amendments do not increase the number ofindividuals subject to the rules' applicability.(8) The proposed amendments do not positively or adverselyaffect this state's economy.Comments on the proposals may be submitted to Rita Chapin,P.O. Box 2018, Austin, Texas 78768-2018, or e-mail commentsto: [email protected]. A public hearing will beheld at a later date.The proposed amendments are proposed under the authority ofTexas Occupations Code §§153.001, which provides authorityfor the Board to adopt rules necessary to administer and enforcetheMedical Practice Act and to adopt rules necessary to regulateand license physicians.Other statutes affected by this rule are Chapters 111 of the TexasOccupations Code.§174.5. Issuance of Prescriptions.

(a) The validity of a prescription issued as a result of atelemedicine medical service is determined by the same standards thatwould apply to the issuance of the prescription in an in-person setting.

(b) This rule does not limit the professional judgment, discre-tion or decision-making authority of a licensed practitioner. A licensedpractitioner is expected to meet the standard of care and demonstrateprofessional practice standards and judgment, consistent with all appli-cable statutes and rules when issuing, dispensing, delivering, or admin-istering a prescription medication as a result of a telemedicine medicalservice.

(c) A valid prescription must be:

(1) issued for a legitimatemedical purpose by a practitioneras part of patient-practitioner relationship as set out in §111.005, ofTexas Occupations Code; and

(2) meet all other applicable laws before prescribing, dis-pensing, delivering or administering a dangerous drug or controlledsubstance.


(d) Any prescription drug orders issued as the result of atelemedicine medical service, are subject to all regulations, limitations,and prohibitions set out in the federal and Texas Controlled SubstancesAct, Texas Dangerous Drug Act and any other applicable federal andstate law.

(e) Limitation on Treatment of Chronic Pain. Chronic painis a legitimate medical condition that needs to be treated but must bebalanced with concerns over patient safety and the public health crisisinvolving overdose deaths. The Legislature has already put into placelaws regarding the treatment of pain and requirements for registrationand inspection of pain management clinics. Therefore, the Board hasdetermined clear legislative intent exists for the limitation of chronicpain treatment through a telemedicine medical service.

(1) Treatment for Chronic Pain. For purposes of this rule,chronic pain has the same definition as used in §170.2(4) of this title(relating to Definitions). Telemedicine medical services used for thetreatment of chronic pain with scheduled drugs by any means otherthan via audio and video two-way communication is prohibited, unlessa patient:

(A) is an established chronic pain patient of the providerissuing the prescription;

(B) is receiving a prescription that is identical to a pre-scription issued at the previous visit; and

(C) has been seen by the prescribing physician or healthprofessional defined under Chap 111.001(1) of Texas OccupationsCode, in the last 90 days either:

(i) in-person; or

(ii) via telemedicine using audio and video two-waycommunication.

(2) Treatment for Acute Pain. For purposes of this rule,acute pain has the same definition as used in §170.2(2) of this title.Telemedicine medical services may be used for the treatment of acutepain with scheduled drugs, unless otherwise prohibited under federaland state law.

[(A) Treatment of chronic pain with scheduled drugsthrough use of telemedicine medical services is prohibited, unless oth-erwise allowed under federal and state law.]

[(B) Treatment of acute pain with scheduled drugsthrough use of telemedicine medical services is allowed, unlessotherwise prohibited under federal and state law.]


Filed with the Office of the Secretary of State on August 2, 2021.TRD-202102995Scott FreshourGeneral CounselTexas Medical BoardEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 305-7016

♦ ♦ ♦PART 11. TEXAS BOARD OF NURSINGCHAPTER 217. LICENSURE, PEERASSISTANCE AND PRACTICE

22 TAC §217.24The Texas Board of Nursing (Board) proposes amendments to22 TAC §217.24(e), relating to Telemedicine Medical ServicePrescriptions. The amendments are being proposed under theauthority of the Occupations Code §301.151.Background.On March 13, 2020, the Governor of the State of Texas certifiedCOVID-19 as posing an imminent threat of disaster to the publichealth and safety and declared a state of disaster in all countiesof Texas. This declaration has been renewed each month there-after, the most recent renewal taking effect July 30, 2021. OnMarch 23, 2020, the Office of the Governor granted a waiver of22 Texas Administrative Code §217.24(e), which prohibits an ad-vanced practice registered nurse (APRN) from treating chronicpain with scheduled drugs through the use of telemedicine med-ical services, unless otherwise permitted under federal and statelaw. The waiver, however, expired on June 6, 2020.The Board held a public meeting on June 8, 2020, to consider theadoption of an emergency rule to permit APRNs to treat chronicpain with scheduled drugs through the use of telemedicine med-ical services under certain conditions during the COVID-19 pan-demic. At the conclusion of the meeting, the Board voted toadopt emergency amendments to 22 Texas Administrative Code§217.24(e).Subsequently, the Board found that the continued effects of theCOVID-19 pandemic necessitated the continuation of emer-gency amendments to §217.24(e) and re-adopted emergencyamendments to the section several times, the last adoptiontaking effect on August 1, 2021. During its most recent publicmeeting on July 30, 2021, the Board determined that permanentrule amendments to §217.24(e), consistent with those amend-ments adopted on an emergency basis during the pandemic,should also be considered due to the continuation of the pan-demic and recent increases in the number of new COVID-19cases throughout the state. Further, the Board determined itwould routinely evaluate the continued need for the permanentrule as the pandemic progresses to ensure ongoing compliancewith state and federal law and to determine when, and if, thenecessity of the permanent rule ceases to exist.Section by Section Overview.The proposed amendments to §217.24(e) are necessary to allowAPRNs to provide necessary treatment to established patientswith chronic pain while mitigating the risk of exposure to COVID-19. Under the proposed amendments, the treatment of chronicpain with scheduled drugs through the use of telemedicine med-ical services by any means other than via audio and video two-way communication is prohibited, unless certain conditions aremet. First, a patient must be an established chronic pain pa-tient of the APRN. Second, the patient must be receiving a pre-scription that is identical to a prescription issued at the previousvisit. Third, the patient must have been seen by the prescrib-ing APRN or physician or health professional as defined in Tex.Occ. Code §111.001(1) in the last 90 days, either in-person orvia telemedicine using audio and video two-way communication.These requirements are consistent with the rules adopted by theTexas Medical Board at 22 Texas Administrative Code §174.5(relating to Issuance of Prescriptions) on an emergency basis,effective July 31, 2021, and being proposed by the Texas Medi-cal Board as a permanent rule, as well as the provisions of fed-eral law that currently permit the use of telemedicine medical


services for the prescription of controlled substances during theCOVID-19 pandemic.Further, an APRN must exercise appropriate professionaljudgment in determining whether to utilize telemedicine medicalservices for the treatment of chronic pain with controlled sub-stances. In order to ensure that telemedicine medical servicesare appropriate for the APRN to use, the adopted rule requiresan APRN to give due consideration to factors that include, at aminimum, the date of the patient's last in-person visit, patientco-morbidities, and occupational related COVID-19 risks. Theseare not the sole, exclusive, or exhaustive factors an APRNshould consider under this rule. Further, the proposed amend-ments only apply to those APRNs whose delegating physicianspermit them to issue re-fills for patients, and the refills are limitedto controlled substances contained in Schedules III through Vonly. If a patient is treated for chronic pain with scheduled drugsthrough the use of telemedicine medical services as permittedby this rule, the medical records must document the exceptionand the reason that a telemedicine visit was conducted insteadof an in-person visit.The remaining proposed changes make conforming changes tothe definitions of the terms acute pain and chronic pain, consis-tent with the definition used by the Texas Medical Board, in 22Texas Administrative Code §170.2(2) and (4) (relating to Defini-tions).Fiscal Note. Katherine Thomas, Executive Director, has deter-mined that for each year of the first five years the proposedamendments will be in effect, there will be no change in the rev-enue to state government as a result of the enforcement or ad-ministration of the proposal.Public Benefit/Cost Note. Ms. Thomas has also determined thatfor each year of the first five years the proposed amendmentsare in effect, the anticipated public benefit will be the adoption ofrules that eliminate the required travel for in-person visits eachtime a patient needs a refill of pain medications and ensures thecontinuity of care for the patient during the ongoing pandemic.It is anticipated that the proposed amendments will improve theoverall continuity of care for these patients, while still meetingapplicable standards of care and current provisions of state andfederal law.It is not anticipated that any new costs of compliance will resultfrom enforcement of the proposal. The proposed amend-ments provide an additional method for providers to servetheir patients, but it is not mandated that providers utilizethese telemedicine capabilities. Providers and patients maystill choose to engage in in-person visits. For those providerswho choose to offer telemedicine medical services under theproposal, each provider is free to choose the most economicalmethod to do so. Since the proposal only requires audio andvideo two-way communication, it is also anticipated that mostproviders will already have access to such technology withoutadditional cost resulting from this proposal.Costs Under the Government Code §2001.0045. The Govern-ment Code §2001.0045 prohibits agencies from adopting a rulethat imposes costs on regulated persons unless the agency re-peals a rule that imposes a total cost on regulated persons thatis equal to or greater than the total cost imposed on regulatedpersons by the proposed rule or amends a rule to decrease thetotal cost imposed on regulated persons by an amount that isequal to or greater than the cost imposed on the persons by the

proposed rule. There are no anticipated costs associated withthe proposal of this rule.Economic Impact Statement and Regulatory Flexibility Analy-sis for Small and Micro Businesses. The Government Code§2006.002(c) and (f) require, that if a proposed rule may have aneconomic impact on small businesses, micro businesses, or ru-ral communities, state agenciesmust prepare, as part of the rule-making process, an economic impact statement that assessesthe potential impact of the proposed rule on these businessesand communities and a regulatory flexibility analysis that con-siders alternative methods of achieving the purpose of the rule.Since there are no anticipated costs associated with the pro-posal, there will be no effect on small businesses, micro busi-nesses, or rural communities.Government Growth Impact Statement. The Board is required,pursuant to Tex. Gov't Code §2001.0221 and 34 Texas Admin-istrative Code §11.1, to prepare a government growth impactstatement. The Board has determined for each year of the firstfive years the proposed amendments will be in effect: (i) the pro-posal does not create or eliminate a government program; (ii)the proposal is not expected to have an effect on current agencypositions; (iii) implementation of the proposal does not requirean increase or decrease in future legislative appropriations tothe Board; (iv) the proposal does not affect the fees paid to theBoard; (v) the proposal does not create a new regulation, al-though it does provide an additional option for individuals alreadysubject to its provisions; (vi) the proposal does not expand, limit,or repeal an existing regulation; (vii) the proposal does not in-crease or decrease the number of individuals subject to its appli-cability; and (viii) the proposal will not affect the state's economy.Takings Impact Assessment. The Board has determined thatno private real property interests are affected by this proposaland that this proposal does not restrict or limit an owner's rightto property that would otherwise exist in the absence of govern-ment action and, therefore, does not constitute a taking or re-quire a takings impact assessment under the Government Code§2007.043.Request for Public Comment. To be considered, written com-ments on this proposal should be submitted to both KristinBenton, Director of Nursing, and James W. Johnston, Gen-eral Counsel, Texas Board of Nursing, 333 Guadalupe, Suite3-460, Austin, Texas 78701, or by e-mail to [email protected] and [email protected], orfaxed to (512) 305-8101. If a hearing is held, written and oralcomments presented at the hearing will be considered.Statutory Authority. The amendments are proposed under theauthority of the Occupations Code §301.151.Section 301.151 addresses the Board's rulemaking authority.Section 301.151 authorizes the Board to adopt and enforcerules consistent with Chapter 301 and necessary to: (i) performits duties and conduct proceedings before the Board; (ii) regu-late the practice of professional nursing and vocational nursing;(iii) establish standards of professional conduct for licenseholders under Chapter 301; and (iv) determine whether an actconstitutes the practice of professional nursing or vocationalnursing.Cross Reference To Statute. The following statutes are affectedby this proposal: the Occupations Code §301.151.§217.24. Telemedicine Medical Service Prescriptions.

(a) - (d) (No change.)


(e) Limitation on Treatment of Chronic Pain. Chronic pain isa legitimate medical condition that needs to be treated, but must bebalanced with concerns over patient safety and the public health crisisinvolving overdose deaths. The Legislature has already put into placelaws regarding the treatment of pain and requirements for registrationand inspection of pain management clinics. Therefore, the Board hasdetermined clear legislative intent exists for the limitation of chronicpain treatment through a telemedicine medical service.

(1) For purposes of this rule, chronic pain has the samedefinition as used in 22 Texas Administrative Code §170.2(4) (relat-ing to Definitions). [Treatment of chronic pain with scheduled drugsthrough use of telemedicine medical services is prohibited, unless oth-erwise allowed under federal and state law. For purposes of this section,"chronic pain" means a state in which pain persists beyond the usualcourse of an acute disease or healing of an injury. Chronic pain may beassociated with a chronic pathological process that causes continuousor intermittent pain over months or years.]

(A) Telemedicine medical services used for the treat-ment of chronic pain with scheduled drugs by any means other thanvia audio and video two-way communication is prohibited, unless apatient:

(i) is an established chronic pain patient of theAPRN;

(ii) is receiving a prescription that is identical to aprescription issued at the previous visit; and

(iii) has been seen by the prescribing APRN orphysician or health professional as defined in Tex. Occ. Code§111.001(1) in the last 90 days, either:

(I) in-person; or

(II) via telemedicine using audio and video two-way communication.

(B) An APRN, when determining whether to utilizetelemedicine medical services for the treatment of chronic pain withcontrolled substances as permitted by paragraph (1)(A) of this subsec-tion, shall give due consideration to factors that include, at a minimum,the date of the patient's last in-person visit, patient co-morbidities, andoccupational related COVID risks. These are not the sole, exclusive,or exhaustive factors an APRN should consider under this rule.

(C) If a patient is treated for chronic pain with sched-uled drugs through the use of telemedicine medical services as permit-ted by paragraph (1)(A) of this subsection, the medical records mustdocument the exception and the reason that a telemedicine visit wasconducted instead of an in-person visit.

(2) For purposes of this rule, acute pain has the same defini-tion as used in 22 Texas Administrative Code §170.2(2). Telemedicinemedical services may be used for the treatment of acute pain withscheduled drugs, unless otherwise prohibited under federal and statelaw. [Treatment of acute pain with scheduled drugs through use oftelemedicine medical services is allowed, unless otherwise prohibitedunder federal and state law. For purposes of this section, "acute pain"means the normal, predicted, physiological response to a stimulus, suchas trauma, disease, and operative procedures. Acute pain is time lim-ited.]


Filed with the Office of the Secretary of State on August 2, 2021.

TRD-202102998Jena AbelDeputy General CounselTexas Board of NursingEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 228-1862

♦ ♦ ♦PART 41. TEXAS BEHAVIORALHEALTH EXECUTIVE COUNCILCHAPTER 883. RENEWALSSUBCHAPTER A. GENERAL PROVISIONS22 TAC §883.1The Texas Behavioral Health Executive Council proposesamendments to 22 TAC §883.1, relating to Renewal of a Li-cense.Overview and Explanation of the Proposed Rule. The proposedamendment is intended to modify the assessment of late feessuch that licensees need only pay a late renewal fee for late re-newals, rather than a late fee in addition to the standard renewalfee.Fiscal Note. Darrel D. Spinks, Executive Director of the Execu-tive Council, has determined that for the first five-year period theproposed rule is in effect, there will be no additional estimatedcost, reduction in costs, or increase in revenue to the state orlocal governments as a result of enforcing or administering therule. Additionally, Mr. Spinks has determined that enforcing oradministering the rule does not have foreseeable implications re-lating to the costs of state or local government. Conversely, Mr.Spinks has determined there will be a decrease or loss in rev-enues to state government as a result of this proposed amend-ment. Under the proposed amendment a licensee filing a laterenewal would only have to pay the late renewal fee, as opposedto currently having to pay the renewal fee in addition to the latefee. If the same historical number of licensees that filed laterenewals this past year continue to do so, then the amount offees collected by this agency will be reduced by approximately$241,769.00 on an annual basis.Public Benefit. Mr. Spinks has determined for the first five-yearperiod the proposed rule is in effect there will be a benefit tolicensees because the proposed rule will provide greater equityin the Executive Council's rules. Mr. Spinks has also determinedthat for each year of the first five years the rule is in effect, thepublic benefit anticipated as a result of enforcing the rule will beto help the Executive Council protect the public.Probable Economic Costs. Mr. Spinks has determined for thefirst five-year period the proposed rule is in effect, there will beno additional economic costs to persons required to comply withthis rule.Small Business, Micro-Business, and Rural Community ImpactStatement. Mr. Spinks has determined for the first five-year pe-riod the proposed rule is in effect, there will be no adverse effecton small businesses, micro-businesses, or rural communities.Regulatory Flexibility Analysis for Small and Micro-Businessesand Rural Communities. Mr. Spinks has determined that theproposed rule will have no adverse economic effect on smallbusinesses, micro-businesses, or rural communities. Thus, the


Executive Council is not required to prepare a regulatory flexibil-ity analysis pursuant to §2006.002 of the Tex. Gov't Code.Local Employment Impact Statement. Mr. Spinks has deter-mined that the proposed rule will have no impact on local em-ployment or a local economy. Thus, the Executive Council is notrequired to prepare a local employment impact statement pur-suant to §2001.022 of the Tex. Gov't Code.Requirement for Rules Increasing Costs to Regulated Persons.The proposed rule does not impose any new or additionalcosts to regulated persons, state agencies, special districts, orlocal governments; therefore, pursuant to §2001.0045 of theTex. Gov't Code, no repeal or amendment of another rule isrequired to offset any increased costs. Additionally, no repeal oramendment of another rule is required because the proposedrule is necessary to protect the health, safety, and welfare of theresidents of this state and because regulatory costs imposed bythe Executive Council on licensees is not expected to increase.Government Growth Impact Statement. For the first five-yearperiod the proposed rule is in effect, the Executive Council esti-mates that the proposed rule will have no effect on governmentgrowth. The proposed rule does not create or eliminate a gov-ernment program; it does not require the creation or eliminationof employee positions; it does not require the increase or de-crease in future legislative appropriations to the agency; it doesnot require an increase in fees paid to the agency but it is esti-mated to result in a decrease in fees paid to this agency; it doesnot create a new regulation; it does not expand an existing regu-lation; it does not increase or decrease the number of individualssubject to the rule's applicability; and it does not positively or ad-versely affect the state's economy.Takings Impact Assessment. Mr. Spinks has determined thatthere are no private real property interests affected by the pro-posed rule. Thus, the Executive Council is not required to pre-pare a takings impact assessment pursuant to §2007.043 of theTex. Gov't Code.Request for Public Comments. Comments on the proposedrule may be submitted to Brenda Skiff, Executive Assistant,Texas Behavioral Health Executive Council, 333 Guadalupe,Ste. 3-900, Austin, Texas 78701, within 30 days of publicationof this proposal in the Texas Register. Comments may also besubmitted via email to [email protected] Executive Council specifically invites comments from thepublic on the issues of whether or not the proposed rule willhave an adverse economic effect on small businesses; if the pro-posed rule is believed to have an adverse effect on small busi-nesses, estimate the number of small businesses believed to beimpacted by the rule, describe and estimate the economic im-pact of the rule on small businesses, offer alternative methodsof achieving the purpose of the rule; then explain how the Exec-utive Council may legally and feasibly reduce that adverse effecton small businesses considering the purpose of the statute un-der which the proposed rule is to be adopted; and finally describehow the health, safety, environmental and economic welfare ofthe state will be impacted by the various proposedmethods. See§2006.002(c) and (c-1) of the Tex. Gov't Code.Statutory Authority. The rule is proposed under Tex. Occ. Code,Title 3, Subtitle I, Chapter 507, which provides the Texas Be-havioral Health Executive Council with the authority to make allrules, not inconsistent with the Constitution and Laws of thisState, which are reasonably necessary for the proper perfor-mance of its duties and regulations of proceedings before it.

Additionally, the Executive Council proposes this rule pursuantto the authority found in §507.152 of the Tex. Occ. Code whichvests the Executive Council with the authority to adopt rules nec-essary to perform its duties and implement Chapter 507 of theTex. Occ. Code.The Executive Council proposes this amended rule pursuant tothe authority found in §507.154 of the Tex. Occ. Code whichauthorizes the Executive Council to set fees necessary to coverthe costs of administering Chapters 501, 502, 503, 505, and 507of the Tex. Occ. Code; as well as §507.255 of the Tex. Occ.Code which requires the Executive Council to charge late re-newal fees.The Executive Council also proposes this rule under the author-ity found in §2001.004 of the Tex. Gov't Code which requiresstate agencies to adopt rules of practice stating the nature andrequirements of all available formal and informal procedures.No other code, articles or statutes are affected by this section.§883.1. Renewal of a License.

(a) All licenses subject to the jurisdiction of the Council arerenewable on a biennial basis and must be renewed online.

(b) Renewals are due on the last day of the license holder'sbirth month, but may be completed up to 60 days in advance.

(c) Renewal Conditions:

(1) Licensees must pay all applicable renewal and late fees,indicate compliance with any continuing education requirements, andcomply with any other requests for information or requirements con-tained within the online renewal system as a prerequisite for renewal ofa license. This paragraph is effective for licenses with expiration datesprior to November 30, 2021.

(2) Licensees must pay all applicable renewal or late re-newal fees, indicate compliance with any continuing education require-ments, and comply with any other requests for information or require-ments contained within the online renewal systems as a prerequisitefor renewal of a license. This paragraph is effective for licenses withexpiration dates on or after November 30, 2021.

[(c) Licensees must pay all applicable renewal and late fees,indicate compliance with any continuing education requirements, andcomply with any other requests for information or requirements con-tained within the online renewal system as a prerequisite for renewalof a license.]

(d) In addition to the requirements of subsection (c) of this sec-tion, licensees must also show compliance with each of the followingas a condition of renewal:

(1) provide or update the standardized set of informationabout their training and practices required by §105.003 of the Healthand Safety Code; and

(2) affirm or demonstrate successful completion of a train-ing course on human trafficking prevention described by §116.002 ofthe Occupations Code.

(e) Licensed psychologists must update their online profile in-formation when renewing their license.

(f) A license may not be renewed until a licensee has compliedwith the requirements of this rule.

(g) A licensee who falsely reports compliance with continuingeducation requirements on his or her renewal form or who practiceswith a license renewed under false pretenses will be subject to disci-plinary action.


(h) Licensees will be sent notification of their approaching re-newal date at least 30 days before their renewal date. This notificationwill be sent to the licensee's main address via first class mail. Respon-sibility for renewing a license rests exclusively with the licensee, andthe failure of the licensee to receive the reminder notification from theCouncil shall not operate to excuse a licensee's failure to timely renewa license or any unlawful practice with a subsequent delinquent license.


Filed with the Office of the Secretary of State on August 2, 2021.TRD-202103000Darrel D. SpinksExecutive DirectorTexas Behavioral Health Executive CouncilEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 305-7706

♦ ♦ ♦TITLE 34. PUBLIC FINANCE

PART 3. TEACHER RETIREMENTSYSTEM OF TEXASCHAPTER 31. EMPLOYMENT AFTERRETIREMENTThe Teacher Retirement System of Texas (TRS) proposes torepeal §§31.1 - 31.3 under Subchapter A (relating to GeneralProvisions) of Chapter 31 in Part 3 of Title 34 of the Texas Ad-ministrative Code; §§31.11 - 31.15 under Subchapter B (relat-ing to Employment After Service Retirement) of Chapter 31; and§§31.31 - 31.37 and 31.41 of Subchapter C (relating to Employ-ment After Disability Retirement) of Chapter 31. These repealsare proposed in conjunction with the proposed new rules underChapter 31 published elsewhere in this issue of the Texas Reg-ister.

BACKGROUND AND PURPOSETRS proposes to repeal its existing sixteen rules under Chapter31 as part of a complete restructuring and revision of that chapterin order to implement new legislation passed by the 87th TexasLegislature. For the same purpose, TRS is also proposing eigh-teen new rules under Chapter 31 elsewhere in this issue of theTexas Register. These proposed new rules effectively incorpo-rate most of the substantive requirements of the proposed re-pealed rules but make formatting and stylistic changes to thoseprovisions for readability purposes. In some cases, the proposednew rules also remove obsolete requirements ormake other sub-stantive changes for policy or legislative reasons. A completedescription of these changes can be found in the preamble tothe proposed new Chapter 31 rules.TRS has determined that the proposed repealed rules, ifadopted, shall become effective on the same date that theproposed new Chapter 31 rules become effective. TRS hasproposed that the proposed new Chapter 31 rules, publishedelsewhere in this issue of the Texas Register, shall becomeeffective on November 1, 2021 or on the earliest first day ofa calendar month after twenty days after TRS submits theadopted new rules to the Secretary of State.

FISCAL NOTEDon Green, TRS Chief Financial Officer, has determined thatfor each year of the first five years the proposed repealed ruleswill be in effect, there will be no foreseeable fiscal implicationsfor state or local governments as a result of administering theproposed repealed rules.PUBLIC COST/BENEFITFor each year of the first five years the proposed repealed ruleswill be in effect, Mr. Green also has determined that the pub-lic benefit anticipated as a result of adopting the proposed re-pealed rules will permit TRS to adopt its proposed new Chapter31 rules in order to conform with recent statutory changes. Inaddition, Mr. Green has determined that the public will benefitfrom increased readability of the proposed new rules if adoptedin place of the proposed repealed rules.Mr. Green has also determined that the public will incur no newcosts as a result of the proposed repealed rules.ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX-IBILITY ANALYSISTRS has determined that there will be no adverse economic ef-fect on small businesses, micro-businesses, or rural communi-ties as a result of the proposed repealed rules. Therefore, nei-ther an economic impact statement nor a regulatory flexibilityanalysis is required under Government Code §2006.002.LOCAL EMPLOYMENT IMPACT STATEMENTTRS has determined that there will be no effect on local employ-ment because of the proposed repealed rules. Therefore, nolocal employment impact statement is required under Govern-ment Code §2001.022.GOVERNMENT GROWTH IMPACT STATEMENTTRS has determined that for the first five years the proposed re-pealed rules are in effect, the proposed repealed rules will notcreate or eliminate any TRS programs; will not require the cre-ation or elimination of employee positions; will not require anincrease or decrease in future legislative appropriations to TRS;will not eliminate any fees currently paid to TRS; will not createa new regulation; will not expand or limit an existing regulation;will not increase or decrease the number of individuals subjectto the rule's applicability; and will not affect the state's economy.The proposed repealed rules will repeal sixteen existing rules forthe reasons stated above in this preamble.TAKINGS IMPACT ASSESSMENTTRS has determined that there are no private real property in-terests affected by the proposed repealed rules; therefore, a tak-ings impact assessment is not required under Government Code§2007.043.COSTS TO REGULATED PERSONSTRS has determined that Government Code §2001.0045 doesnot apply to the proposed repealed rules because the proposedrepealed rules do not impose a cost on regulated persons.COMMENTSComments may be submitted in writing to Brian Guthrie, TRSExecutive Director, 1000 Red River Street, Austin, Texas 78701-2698. Written comments must be received by TRS no later than30 days after publication of this notice in the Texas Register.


SUBCHAPTER A. GENERAL PROVISIONS34 TAC §§31.1 - 31.3STATUTORY AUTHORITYThe proposed repealed rules are proposed under the authorityof Government Code §824.604, which provides that the board oftrustees may adopt rules to administer laws under Subchapter Gof Chapter 824 of the Government Code; and Government Code§825.102, which authorizes the board of trustees to adopt rulesfor the transaction of the business of the board.CROSS-REFERENCE TO STATUTEThe proposed repealed rules affect the following statutes: Gov-ernment Code §824.601, which relates to loss of monthly ben-efits; Government Code §824.602, which relates to exceptions;and Government Code §825.4092, relating to employer contri-butions for employed retirees.§31.1. Definitions.§31.2. Monthly Certified Statement.§31.3. Exceptions Apply only to Effective Retirements.The agency certifies that legal counsel has reviewed the pro-posal and found it to be within the state agency's legal authorityto adopt.

Filed with the Office of the Secretary of State on July 30, 2021.TRD-202102987Don GreenChief Financial OfficerTeacher Retirement System of TexasEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 542-6560

♦ ♦ ♦SUBCHAPTER B. EMPLOYMENT AFTERSERVICE RETIREMENT34 TAC §§31.11 - 31.15STATUTORY AUTHORITYThe proposed repealed rules are proposed under the authorityof Government Code §824.604, which provides that the board oftrustees may adopt rules to administer laws under Subchapter Gof Chapter 824 of the Government Code; and Government Code§825.102, which authorizes the board of trustees to adopt rulesfor the transaction of the business of the board.CROSS-REFERENCE TO STATUTEThe proposed repealed rules affect the following statutes: Gov-ernment Code §824.601, which relates to loss of monthly ben-efits; and Government Code §824.602, which relates to excep-tions.§31.11. Employment Resulting in Forfeiture of Service RetirementAnnuity.§31.12. Exceptions to Forfeiture of Service Retirement Annuity.§31.13. Substitute Service.§31.14. One-half Time Employment.§31.15. Full-time Employment after 12 Consecutive Month Break inService.The agency certifies that legal counsel has reviewed the pro-posal and found it to be within the state agency's legal authorityto adopt.


♦ ♦ ♦SUBCHAPTER C. EMPLOYMENT AFTERDISABILITY RETIREMENT34 TAC §§31.31 - 31.37, 31.41STATUTORY AUTHORITYThe proposed repealed rules are proposed under the authorityof Government Code §824.604, which provides that the board oftrustees may adopt rules to administer laws under Subchapter Gof Chapter 824 of the Government Code; and Government Code§825.102, which authorizes the board of trustees to adopt rulesfor the transaction of the business of the board.CROSS-REFERENCE TO STATUTEThe proposed repealed rules affect the following statutes: Gov-ernment Code §824.310, relating to purpose of disability bene-fit; limit on supplemental income; Government Code §824.601,which relates to loss of monthly benefits; and Government Code§824.602, which relates to exceptions.§31.31. Employment Resulting in Forfeiture of Disability RetirementAnnuity.§31.32. Half-time Employment Up to 90 Days.§31.33. Substitute Service Up to 90 Days.§31.34 Employment Up to Three Months on a One-Time Only TrialBasis.§31.35. Disability Retiree Report of Excess Compensation.§31.36. Forfeiture of Disability Retirement Annuity Payments Due toExcess Compensation.§31.37. Applicability of Excess Compensation Provisions to Employ-ment in Texas Public Educational Institutions.§31.41. Return to Work Employer Pension Surcharge.The agency certifies that legal counsel has reviewed the pro-posal and found it to be within the state agency's legal authorityto adopt.


♦ ♦ ♦CHAPTER 31. EMPLOYMENT AFTERRETIREMENTThe Teacher Retirement System of Texas (TRS) proposes new§§31.1 - 31.6 under new Subchapter A (relating to General Pro-visions and Procedures) of Chapter 31 in Part 3 of Title 34 of theTexas Administrative Code; new §§31.11 - 31.19 under newSub-chapter B (relating to Employment After Retirement Exceptions)


of Chapter 31 in Part 3 of Title 34 of the Texas AdministrativeCode; and new §§31.31 - 31.33 of new Subchapter C (relatingto Disability Retiree Compensation Limits) of Chapter 31 in Part3 of Title 34 of the Texas Administrative Code. These new rulesare proposed in conjunction with the proposed amendments to§41.4 (relating to Employer Health Benefit Surcharge) and theproposed repeals of all current rules under Chapter 31 (relatingto Employment After Retirement) in Part 3 of Title 34 of the TexasAdministrative Code as published elsewhere in this issue of theTexas Register.

BACKGROUND AND PURPOSETRS proposes eighteen new rules relating to employment afterretirement (EAR) for TRS retirees in order to implement new leg-islation passed by the 87th Texas Legislature. Specifically, theseproposed new rules are necessary to implement House Bill 1585(HB 1585), Senate Bill 202 (SB 202), Senate Bill 288 (SB 288),and Senate Bill 1356 (SB 1356). Each of these bills made sub-stantial changes to EAR for TRS retirees.HB 1585 amended, most relevantly, Government Code§824.601 to make two key changes to TRS's EAR requirements.First, HB 1585 amended Government Code §824.601(b-1) tochange the current "safe harbor" retirement date for serviceretirees who are exempt from EAR restrictions from January 1,2011, to January 1, 2021. Second, HB 1585 amended Govern-ment Code §824.601 by creating a "three strikes" process undernew subsection (b-3) that must be completed before a serviceretiree forfeits the retiree's full annuity for a month based on thatretiree's employment with TRS-covered employers during thatmonth. The "three strikes" consist of a series of warnings andan alternate "dollar-for-dollar" payment option that TRS mustprovide a service retiree before the retiree may be subject tototal forfeiture of the retiree's annuity.SB 202 amended Government Code §825.4092 and prohibitsemployers from directly or indirectly passing on the cost of ei-ther the pension or health benefit surcharge to retirees throughpayroll deductions, fees, or any other means designed to recoverthe cost.SB 288 created new Government Code §824.6021 andamended Government Code §825.4092. These changes cre-ated a new EAR and surcharge exception for certain serviceretirees who are employed in positions dedicated to mitigatinglearning loss caused by the COVID-19 pandemic. The positionsmust be in addition to normal staffing levels, funded by specificfederal relief funds, and end no later than December 31, 2024.This exception does not apply to disability retirees or retireesemployed with institution of higher education.Lastly, SB 1356 amended, most relevantly, Government Code§824.602 to create a new exception to TRS's EAR requirements.Specifically, under new Education Code §33.913, SB 1356 es-tablished a new method for nonprofit organizations to estab-lish tutoring programs in cooperation with public schools. Theamendment to Government Code §824.602 provides that TRSretirees may be employed in these programs up to full-time dur-ing a month without forfeiting their annuity for that month. Theseretirees remain subject to employer surcharges.In addition to implementing legislation, the proposed new rulesalso make two key substantive changes to TRS's EAR require-ments outside of the changes required by new legislation.First, the proposed new rules change TRS's existing standard forone-half time employment from the current variable monthly limit

equal to four clock hours per workday in a given calendar monthto a uniformmonthly limit of 92 hours per month regardless of thenumber of workdays in that month or 11 days if the retiree com-bines one-half time and substitute employment in that month.This new uniform limit will simplify EAR requirements for retireesand reporting employers, and the change is retiree-friendly be-cause in no case would it reduce the hours or days availablefor a retiree to work on a one-half time or less basis during amonth. If ultimately adopted, the new limit would not only applyfor purposes of EAR, but it would also apply to employer sur-charges. This application does mean that, in certain instances,TRS could possibly not receive surcharges that it currently doesbased on a retiree's employment during a month, but TRS's ac-tuary of record, Gabriel, Roeder, Smith & Company (GRS), de-termined the change would not have a material negative impacton the pension fund.Second, the proposed new rules expressly expand the definitionof "substitute" for the purposes of EAR to include an employeewho, on a temporary basis, monitors an in-person class while theclassroom teacher temporarily instructs the class virtually. Thisis a novel employment arrangement that TRS has encounteredduring the COVID-19 public health emergency, and, based onan interpretation of its current rule, TRS has permitted this ar-rangement to qualify as substitute employment for the purposesof EAR. This change to the rule codifies TRS's current interpreta-tion of its substitute rule and places clear parameters upon whenit may be used by school districts and retirees.The proposed new rules also make several additional minorchanges necessary to ensure that the EAR rules conform withcurrent TRS practice and nomenclature, and the proposed newrule incorporate many existing provisions from the proposedrepealed EAR rules. TRS has included a detailed, rule-by-rulesummary of changes below in its "Section-by-Section Sum-mary."Lastly, TRS has determined that the proposed new rules, ifadopted, shall become effective on November 1, 2021, or onthe earliest first day of a calendar month after twenty days afterTRS submits the adopted new rules to the Secretary of State.SECTION-BY-SECTION SUMMARYProposed New §31.1 (relating to Definitions) defines severalterms for use throughout Chapter 31. The proposed new ruleincorporates existing definitions from current §31.1 and alsoadds several new definitions, such as for the terms "disabilityretiree," "service retiree," and "employment," to simplify andclarify rule language throughout the chapter.Proposed New §31.2 (relating to Monthly Certified Statement)largely incorporates the existing provisions of current §31.2 withsome nonsubstantive changes for style and clarity purposes.Proposed New §31.2 also adds provisions relating to how em-ployers can report retirees working under EAR exceptions andmakes other minor changes to conform the rule's requirementswith how employer reporting works under TRS's current report-ing system.Proposed New §31.3 (relating to Return-to-Work Employer Pen-sion Surcharge) largely incorporates the existing provisions ofcurrent §31.41 with some nonsubstantive changes for style andclarity purposes. In addition, Proposed New §31.3 adds provi-sions relating to the surcharge pass-through prohibition createdby SB 202 and the new surcharge exception for certain fed-erally-funded COVID-19 positions created by SB 288. Lastly,Proposed New §31.3 provides that a 92-hour uniform standard


for one-half time employment (or the combination standards forone-half time employment under Proposed New §31.19) shall beused to determine when employer surcharges are due.Proposed New §31.4 (relating to Employment Resulting in For-feiture of Retirement Annuity) incorporates provisions from cur-rent §31.11 and §31.31. Proposed New §31.4 also adds pro-visions to clarify the consequences for exceeding the limits onEAR for service retirees with an effective date of retirement onor before January 1, 2021; service retirees with an effective dateof retirement after January 1, 2021; and disability retirees re-gardless of effective of retirement.Proposed New §31.5 (relating to Notice and Forfeiture Re-quirements for Certain Service Retirees) implements the "threestrikes" process from HB 1585. Proposed New §31.5 describeshow TRS shall implement the three strikes process; how lateadjustments to EAR reporting and retiree appeals will be incor-porated into the process; and how TRS shall determine the dateof issuance for a warning under the three strikes process.Proposed New §31.6 (relating to Second EAR Warning Pay-ments) implements the "dollar-for-dollar" payment option fromthe new "three-strikes" process. Proposed New §31.6 describeswhat compensation shall be used to determine the amount of thepayment due under this requirement and how employers mayadjust that compensation amount when a correction is needed.Proposed new §31.6 also provides that, by default, TRS will as-sume that a retiree who is subject to a second EARwarning mustrepay to TRS the lesser of either the total monthly annuity pay-ments that the retiree received for the relevant months or the totalcompensation earned for all employment with TRS-covered em-ployers for that month. Proposed new §31.6 also provides thata retiree may elect to pay TRS the greater of these two amountsif the retiree wishes to do so.Proposed New §31.11 (relating to Exceptions to Forfeiture of Re-tirement Annuity) primarily incorporates provisions from current§31.3 and §31.12 but clarifies that EAR exceptions only applyfor service retirees with a retirement date after January 1, 2021.Proposed New §31.12 (relating to Substitute Service) primarilyincorporates provisions from current §§31.1, 31.13, and 31.32.Proposed New §31.12 also extends the definition of "substitute"to include an employee monitoring an in-person class on a tem-porary basis while the classroom teacher is temporarily instruct-ing the class virtually. In addition, Proposed New §31.12 alsoclarifies how the 90-day limit for disability retirees who work assubstitutes interacts with the new tutor exception provided by SB1356.Proposed New §31.13 (relating to One-half Time Employment)largely incorporates provisions from current §31.14 and §31.33.In addition, Proposed New §31.13 provides for the new 92-houruniform standard for determining whether a retiree has workedone-half time or less during a month. Proposed New §31.13 alsoclarifies how the 90-day limit for disability retirees who work one-half time or less interacts with the new tutor exception providedby SB 1356.Proposed New §31.14 (relating to Full-time Employment after 12Consecutive Month Break in Service) largely incorporates provi-sions from current §31.15. In addition, Proposed New §31.15clarifies that employment under either of the new EAR excep-tions (the tutor exception or federally-funded COVID-19 positionexception) counts as employment with a TRS-covered employerfor the purposes of determining whether the retiree has had a 12full, calendar month break in service after retirement.

Proposed New §31.15 (relating to Tutors under Education Code§33.913) implements the tutor exception to EAR created by SB1356. In addition, Proposed New §31.15 clarifies that employ-ment under the tutor exception count is subject to the general90-day per school year limit for disability retirees who return towork for a TRS-covered employer.Proposed New §31.16 (relating to Federally-Funded COVID-19Personnel) implements the new federally-funded COVID-19 po-sition exception provided by SB 288. Proposed New §31.16 alsoclarifies that, for the purposes of EAR, a position will be consid-ered to end by December 31, 2024 if the position no longer ex-ists after that date or if the position is no longer funded by federalfunds after that date.Proposed New §31.17 (relating to Employment Up to ThreeMonths on a One-time Trial Basis) primarily reincorporatesthe provisions of current §31.34 with only minor conformingchanges.Proposed New §31.18 (relating to Combining EAR Exceptions)incorporates provisions from existing §§31.13, 31.14, 31.32, and31.33 regarding how one-half time employment and substituteemployment combine for the purposes of EAR. In addition, Pro-posed New §31.18 provides for how the new tutor exceptionand federally-funded COVID-19 position exception combine withthe existing EAR exceptions. Specifically, the rule clarifies thatthe federally-funded COVID-19 position exception shall be ac-counted for separately from other EAR exceptions and shall notaffect employment under other EAR exceptions. More than one-half time employment under the tutor exception, however, maynot be combined with employment under any other exceptionduring a month unless all of the retiree's employment during thatmonth qualifies as substitute employment or the retiree quali-fies for the twelve-month break-in-service exception. If a re-tiree works one-half time or less under the tutor exception dur-ing a month, however, the retiree may combine that employ-ment during a month just as a retiree could combine any otherone-half time employment during a month. Lastly, ProposedNew §31.18 provides for how TRS shall consider employmentin a single position that qualifies for more than one EAR excep-tion, most notably providing that a position that qualifies for thefederally-funded COVID-19 position exception shall only be sub-ject to the requirements and limits of that exception.Proposed New §31.19 (relating to Combining EAR Exceptionsand Employer Surcharges) incorporates existing provisions fromcurrent §31.41. Proposed New §31.19 provides for how TRSshall consider a retiree's employment during a month if the re-tiree combines employment under more than one EAR excep-tion. The combination requirements largely mirror the combina-tion limits under Proposed New §31.18 for the purpose of de-termining whether a retiree is subject to EAR forfeiture require-ments except that, for the purposes of employer surcharges, em-ployment more than one-half time under the tutor exception orunder the twelve-month break-in-service exception is subject toemployer surcharges.Proposed New §31.31 (relating to Disability Retiree Report ofExcess Compensation) primarily reincorporates the provisionsof current §31.35 with only minor conforming changes.Proposed New §31.32 (relating to Forfeiture of Disability Retire-ment Annuity Payments Due to Excess Compensation) primarilyreincorporates the provisions of current §31.36 with only minorconforming changes.


Proposed New §31.33 (relating to Applicability of ExcessCompensation Provisions to Employment in Texas Public Edu-cational Institutions) primarily reincorporates the provisions ofcurrent §31.37 with only minor conforming changes.FISCAL NOTEDon Green, TRS Chief Financial Officer, has determined that foreach year of the first five years the proposed new rules will bein effect, there will be no foreseeable fiscal implications for stateor local governments as a result of administering the proposednew rules.PUBLIC COST/BENEFITFor each year of the first five years the proposed new rules will bein effect, Mr. Green also has determined that the public benefitanticipated as a result of adopting the proposed new rules will befor TRS's EAR rules to conform with recent statutory changes. Inaddition, Mr. Green has determined that the change to a uniformone-half time standard will simplify and improve administration ofEAR requirements for retirees, employers, and TRS, and TRS'sactuary of record, Gabriel, Roeder, Smith &Company, has statedthat the change would not materially harm the fund. Lastly, Mr.Green has determined that the public will benefit from increasedreadability of the proposed new rules.Mr. Green has also determined that the public will incur no newcosts as a result of complying with the proposed new rules.ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX-IBILITY ANALYSISTRS has determined that there will be no adverse economic ef-fect on small businesses, micro-businesses, or rural communi-ties as a result of the proposed new rules. Therefore, neither aneconomic impact statement nor a regulatory flexibility analysis isrequired under Government Code §2006.002.LOCAL EMPLOYMENT IMPACT STATEMENTTRS has determined that there will be no effect on local em-ployment because of the proposed new rules. Therefore, no lo-cal employment impact statement is required under GovernmentCode §2001.022.GOVERNMENT GROWTH IMPACT STATEMENTTRS has determined that for the first five years the proposednew rules are in effect, the proposed new rules will not createor eliminate any TRS programs; will not require the creation orelimination of employee positions; will not require an increaseor decrease in future legislative appropriations to TRS; will noteliminate any fees currently paid to TRS; will not expand, limit orrepeal an existing regulation; will not increase or decrease thenumber of individuals subject to the rule's applicability; and willnot affect the state's economy.The proposed new rules will create 18 new rules but almost allthese provisions either substantively reincorporate and reorga-nize provisions from existing Chapter 31 rules that are proposedfor repeal elsewhere in this issue of the Texas Register or includelanguage necessary to implement legislation.TAKINGS IMPACT ASSESSMENTTRS has determined that there are no private real property in-terests affected by the proposed new rules, therefore, a tak-ings impact assessment is not required under Government Code§2007.043.COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 doesnot apply to the proposed new rules because the proposed newrules do not impose a cost on regulated persons.COMMENTSComments may be submitted in writing to Brian Guthrie, TRSExecutive Director, 1000 Red River Street, Austin, Texas 78701-2698. Written comments must be received by TRS no later than30 days after publication of this notice in the Texas Register.SUBCHAPTER A. GENERAL PROVISIONSAND PROCEDURES34 TAC §§31.1 - 31.6STATUTORY AUTHORITYThe proposed new rules are proposed under the authority ofGovernment Code §824.604, which provides that board oftrustees may adopt rules to administer laws under Subchap-ter G of Chapter 824 of the Government Code; GovernmentCode §825.4092, which relates to employer contributions foremployed retirees; and Government Code §825.102, which au-thorizes the board of trustees to adopt rules for the transactionof the business of the board.CROSS-REFERENCE TO STATUTEThe proposed new rules affect the following statutes: Govern-ment Code §824.601, which relates to loss of monthly bene-fits; Government Code §824.602, which relates to exceptions;Government Code §824.6021, relating to temporary exceptionto mitigate learning loss attributable to COVID-19 pandemic, asenacted by SB 288 to be effective on September 1, 2021; andGovernment Code §825.4092, relating to employer contributionsfor employed retirees.§31.1. Definitions.

In this chapter, the following words and terms shall have the followingmeanings:

(1) Disability retiree--A TRS retiree receiving a disabil-ity annuity payment under Subchapter D of Chapter 824, GovernmentCode.

(2) EAR--Employment after retirement.

(3) Employer--Any employer required to report the em-ployment of active members or TRS retirees to TRS in accordance withSubtitle C of Title 8 of the Government Code.

(4) Employer surcharge--The return-to-work employerpension surcharge described under Section §31.3 of this title (relatingto Return-to-Work Employer Pension Surcharge) and GovernmentCode §825.4092.

(5) Employment--Any work arrangement between a Texaspublic educational institution and a TRS retiree that qualifies as em-ployment under Government Code §824.601, including any work by aTRS retiree who is:

(A) employed by a third-party entity unless the retireedoes not perform duties or provide services on behalf of or for the ben-efit of the institution; or

(B) performing duties or providing services for or onbehalf of the institution in the first 12 full, consecutive calendar monthsafter the retiree's effective date of retirement that an employee of theinstitution would otherwise perform or provide, and:


(i) waiving, deferring, or foregoing compensationfor the services or duties;

(ii) performing the duties or providing the servicesas an independent contractor; or

(iii) serving as a volunteer without compensationand performing the same duties or providing the same services for theinstitution that the retiree performed or provided immediately beforeretiring and the retiree has an agreement to perform those duties orprovide those services after the first 12 full, consecutive calendarmonths after the retiree's effective date of retirement.

(6) Report month--The calendar month to which a monthlycertified statement under §31.2 of this title (relating to Monthly Certi-fied Statement) applies, rather than the month in which it is submittedto TRS.

(7) Retiree--A service retiree or disability retiree.

(8) School year--For purposes of employment after retire-ment, a twelve-month period beginning on September 1 and ending onAugust 31 of the calendar year.

(9) Service retiree--A retiree receiving a service annuitypayment under Subchapter C of Chapter 824, Government Code.

(10) Third-party entity--An entity retained by a Texas pub-lic educational institution to provide personnel to the institution whoperform duties or provide services that employees of that institutionwould otherwise perform or provide.

(11) TRS--The Teacher Retirement System of Texas.

§31.2. Monthly Certified Statement.(a) In accordance with the requirements of Government Code

§ 824.6022, an employer shall submit to TRS a monthly certified state-ment of employment for all retirees employed by the employer duringeach month of a school year.

(b) Employers must submit the monthly certified statementand all required employer surcharges under §31.3 of this title (relatingto Return-to-Work Employer Pension Surcharges) for each reportmonth from September through July before the eleventh day of themonth following the applicable report month. For the monthly certifiedstatement for the report month of August, the employer shall submitthe monthly certified statement and all required employer surchargesbefore the seventh day of September.

(c) If the due date for submission of a monthly certified state-ment and required employer surcharges under subsection (b) of thissection falls on a weekend or federal holiday, an employer shall submitthe monthly certified statement and required employer surcharges onthe last business day prior to the due date.

(d) An employer that fails to timely submit a monthly certifiedstatement and all required employer surcharges must also pay all ap-plicable interest and late fees provided in subsections (f) and (g) of thissection.

(e) A monthly certified statement is not considered submittedto TRS until it is completed. To be complete, the monthly certifiedstatement must include all the following information regarding a retireeemployed by the employer during the report month:

(1) the number of hours and days worked by the retiree;

(2) whether the retiree's employment qualifies as one ormore of the following types:

(A) substitute employment;

(B) one-half time or less employment;

(C) employment as a tutor under Section 33.913 of theEducation Code;

(D) employment in a federally-funded COVID-19 per-sonnel position that meets the requirements of Section 824.6021 of theGovernment Code and §31.16 of this title (relating to Federally-fundedCOVID-19 Personnel);

(E) full-time employment;

(F) trial employment of a disability retiree for up tothree months; or

(G) any combination of these types.

(3) the amount of gross compensation paid to the retireeduring the report month;

(4) the total amount due under §41.4 of this title (relatingto Employer Health Benefit Surcharge); and

(5) any other information requested by TRS to administerthis chapter.

(f) Employers that fail to timely submit a monthly certifiedstatement, any required employer surcharges, or interest on unpaidamounts as required in this section shall pay to TRS the late fee estab-lished in this subsection for each business day that the monthly certifiedstatement is past due. The late fees required to be paid are as follows:

(1) For employers with fewer than 100 employees, the latefee for the first business day the monthly certified statement is past dueis $100. For each subsequent business day that the monthly certifiedstatement is past due, the employer shall pay an additional $10.

(2) For employers with at least 100 employees but no morethan 500 employees, the late fee for the first business day the monthlycertified statement is past due is $250. For each subsequent businessday that the monthly certified statement is past due, the employer shallpay an additional $25.

(3) For employers with more than 500 employees but nomore than 1,000 employees, the late fee for the first business day thereport or documentation is past due is $500. For each subsequent busi-ness day that the monthly certified statement is past due, the employershall pay an additional $50.

(4) For employers with more than 1,000 employees, thelate fee for the first business day the monthly certified statement is pastdue is $1,000. For each subsequent business day that the monthly cer-tified statement is pat due, the employer shall pay an additional $100.

(g) In determining the number of employees for purposes ofassessing the late fee in subsection (f) of this section, TRS shall basethe fee on the number of employees reflected on the employer's monthlycertified statement for May of the preceding school year. New employ-ers will pay late fees for the first school year as provided in subsection(f)(1) of this section.

§31.3. Return-to-Work Employer Pension Surcharge.

(a) For each report month a retiree is employed by an employerfor more than 92 hours in a calendar month and that retiree is not ex-empt from surcharge under subsection (b) of this section, the employershall pay to TRS a surcharge based on the compensation paid to theretiree during that report month. The criteria used to determine if a re-tiree is working more than 92 hours in a calendar month are the same asthe criteria for determining one-half time employment under §31.13 ofthis title (relating to One-half Time Employment) even if the retiree'semployment also qualifies for an exception under §31.14 of this title(relating to Full-time Employment after 12 Consecutive Month Break


in Service), or §31.15 of this title (relating to Tutors under EducationCode §33.913).

(b) Employers are not required to submit employer surchargesbased on the employment of a retiree during a calendar month if:

(1) the retiree works 92 hours or less during the applicablereport month;

(2) the retiree retired prior to September 1, 2005;

(3) the retiree is employed solely as a substitute and thatemployment meets all the requirements §31.12 of this title (relatingto Substitute Service) even if the retiree's substitute employment alsoqualifies for another exception under Subchapter B of this chapter (re-lating to Employment After Retirement Exceptions);

(4) the retiree is employed in multiple positions during thecalendar month and does not exceed the limits for such combined em-ployment under §31.19 of this title (relating to Combining EAR Ex-ceptions and Employer Surcharges); or

(5) the retiree's employment is in a position that qualifies asa federally-funded COVID-19 position under §31.16 of this title (relat-ing to Federally-funded COVID-19 Personnel) and Government Code§824.6021.

(c) The amount of the employer surcharge that an employermust contribute to TRS for each retiree subject to surcharge under thissection is equal to the sum of the compensation paid to the retiree duringthe report month multiplied by the member contribution rate in effectfor the report month plus the compensation paid to the retiree duringthe report month multiplied by the state contribution rate in effect forthat report month.

(d) If a retiree is employed concurrently in more than one po-sition, the employer surcharge is owed if the combined employmentexceeds the monthly limits described by §31.19 of this title. If the em-ployment is with more than one employer, the employer surcharge isowed by each employer.

(e) Employers shall not directly or indirectly pass the cost ofthe employer surcharge under this section on to the retiree through pay-roll deduction, by imposition of a fee, or by any other means designedto recover the cost.

§31.4. Employment Resulting in Forfeiture of Retirement Annuity.(a) A service retiree with an effective date of retirement prior

to January 1, 2021, may be employed in any capacity in Texas publiceducation without forfeiture of benefits for the months of employment.

(b) A service retiree with an effective date of retirement afterJanuary 1, 2021, is subject to the forfeiture requirements of §31.5 of thistitle (relating toNotice and Forfeiture Requirements for Certain ServiceRetirees) for any month in which the retiree is employed by a Texaspublic educational institution unless the employment qualifies for anexception under Subchapter B of this chapter (relating to EmploymentAfter Retirement Exceptions).

(c) Disability retirees, regardless of their effective date of re-tirement, are not entitled to an annuity payment for any month in whichthe retiree is employed by a Texas public educational institution unlessthe employment qualifies for an exception under Subchapter B of thischapter.

(d) A retiree may be employed in private schools, publicschools in other states, in private business, or in other entities thatare not TRS-covered employers without forfeiting their annuitiesunless any of these entities also qualify as a third-party entities for thepurposes of this chapter.

(e) This chapter applies only to persons retired under TRS. Itdoes not apply to persons retired under other retirement or pension sys-tems.

§31.5. Notice and Forfeiture Requirements for Certain Service Re-tirees.

(a) A service retiree with an effective date of retirement afterJanuary 1, 2021, shall only forfeit the service retiree's monthly annuitypayment based on the service retiree's employment by a Texas publiceducational institution during a calendar month if the retiree has previ-ously received the warnings required by subsections (b) and (c) of thissection.

(b) If TRS determines that a service retiree's employment by aTexas public educational institution does not qualify for an exceptionunder Subchapter B of this chapter (relating to Employment after Re-tirement Exceptions), TRS shall issue a written EAR warning to theservice retiree notifying the retiree of this fact. The EAR warning un-der this subsection may address multiple months of the service retiree'semployment.

(c) If TRS determines that a service retiree's employment by aTexas public educational institution does not qualify for an exceptionunder Subchapter B of this chapter and that employment occurs in amonth after the month TRS issued to the service retiree the warningunder subsection (b) of this section, then TRS shall issue a second EARwarning to the service retiree that:

(1) notifies the service retiree of this fact; and

(2) requires the service retiree to pay TRS an amount equalto the lesser of the total amount of either:

(A) the service retiree's gross monthly annuity pay-ments for the months addressed by this warning; or

(B) the total gross amount of compensation earned bythe service retiree during the months addressed by this warning as de-scribed by §31.6 of this title (relating to Second EAR Warning Pay-ments).

(d) The EAR warning under subsection (c) of this section mayaddress multiple months of the service retiree's employment.

(e) If TRS determines that a service retiree's employment bya Texas public educational institution does not qualify for an excep-tion under Subchapter B of this chapter and that employment occursin a month after the month TRS issued to the retiree the second EARwarning under subsection (c) of this section, the service retiree is notentitled to receive a monthly annuity payment for any such month andTRS shall collect any annuity payments the service retiree received towhich the service retiree was not entitled.

(f) If TRS determines after issuing an EARwarning under sub-sections (b) or (c) of this section that the service retiree's employmentby a Texas public educational institution did not qualify for an excep-tion under Subchapter B of this chapter and that employment occurredin a month prior to or during the month TRS issued such a warning butwas not included in the warning, then TRS shall:

(1) issue an EAR warning in accordance with subsection(b) of this section if the excluded month was the month TRS issued theEAR warning under that subsection or an earlier month; or

(2) issue an EAR warning and request for payment undersubsection (c) of this section if the excluded month was the month TRSissued the EAR warning under that subsection or in an earlier monththat was also after the month TRS issued the EAR warning under sub-section (b) of this section.


(g) If a service retiree appeals a TRS determination regardingthe service retiree's employment with a Texas public educational insti-tution during a month or months that TRS included in an EAR warningunder subsection (b) or (c) of this section, the EAR warning shall stillbe considered to have been issued by TRS unless the service retiree'sappeal contests every month addressed by the applicable warning. Ifthe service retiree contests the TRS determination for every month in-cluded in an EAR warning, that EAR warning shall not be consideredto have been issued during the pendency of the service retiree's appeal.

(h) If a service retiree prevails on an appeal of every monthincluded in an EAR warning under subsection (b) or (c) of this sec-tion, then TRS shall rescind the EAR warning. If the service retiree'sappeal does not prevail on any month included in an EAR warning un-der subsection (b) or (c) of this section, then the EAR warning shallbe reinstated and TRS shall adjust the amounts owed by the service re-tiree to TRS, if any, for months after the issuance of the reinstated EARwarning in which TRS determined the service retiree's employment bya Texas public educational institution did not qualify for an exceptionto the limits on EAR as provided by Subchapter B of this chapter.

(i) TRS shall consider an EAR warning under this section tohave been issued on the date TRS sends the warning to the serviceretiree.

§31.6. Second EAR Warning Payments.

(a) A service retiree who receives a second EAR warning asprovided in §31.5 of this title (relating to Notice and Repayment Re-quirements for Certain Service Retirees) shall pay to TRS an amountequal to the lesser of either:

(1) the service retiree's gross monthly annuity payments forthe months addressed by this warning; or

(2) the total gross amount of compensation earned by theservice retiree during the months addressed by this warning as de-scribed by this section.

(b) The amount in subsection (a)(2) of this section shall onlyinclude all compensation earned by the service retiree based on theservice retiree's employment with a Texas public educational institutionduring a month subject to the second EAR warning regardless of whensuch an amount is paid to the service retiree. The amount shall notinclude:

(1) compensation paid to the service retiree during the ap-plicable months unless the service retiree also earned the compensationbased on the service retiree's employment with a Texas public educa-tional institution during a month subject to the second warning;

(2) compensation earned by the service retiree in a positionthat qualifies for the exception under §31.16 of this title (relating toFederally-funded COVID-19 Personnel); and

(3) compensation paid to the service retiree that would notqualify as creditable compensation if paid to an active member by anemployer for the same services.

(c) A service retiree may elect to pay the greater of the twoamounts described by subsection (a) of this section. If a retiree electsto pay the greater amount, the retiree must notify TRS of this electionin writing.

(d) If an employer adjusts the compensation earned by a ser-vice retiree in a month subject to a second EARwarning payment underthis section but does not adjust the hours or days worked by the retireerelating to that compensation, the amount due shall be adjusted for thatpayment, and TRS shall request or return any amounts necessary tocorrect the payment so long as the adjustment is received no later than

12 months after the end of the school year in which the compensationwas earned.



♦ ♦ ♦SUBCHAPTER B. EMPLOYMENT AFTERRETIREMENT EXCEPTIONS34 TAC §§31.11 - 31.19STATUTORY AUTHORITYThe proposed new rules are proposed under the authority ofGovernment Code §824.604, which provides that board oftrustees may adopt rules to administer laws under Subchap-ter G of Chapter 824 of the Government Code; GovernmentCode §825.4092, which relates to employer contributions foremployed retirees; and Government Code §825.102, which au-thorizes the board of trustees to adopt rules for the transactionof the business of the board.CROSS-REFERENCE TO STATUTEThe proposed new rules affect the following statutes: Govern-ment Code §824.601, which relates to loss of monthly bene-fits; Government Code §824.602, which relates to exceptions;Government Code §824.6021, relating to temporary exceptionto mitigate learning loss attributable to COVID-19 pandemic, asenacted by SB 288 to be effective on September 1, 2021; andGovernment Code §825.4092, relating to employer contributionsfor employed retirees.§31.11. Exceptions to Forfeiture of Retirement Annuity.

(a) Service retirees who retired after January 1, 2021, and alldisability retirees are subject to the forfeiture requirements in §31.4 ofthis title (relating to Employment Resulting in Forfeiture of RetirementAnnuity) for any month in which the retiree is employed by a publiceducational institution covered by TRS unless the employment quali-fies for an exception under this subchapter.

(b) The exceptions to forfeiture of annuities provided in thischapter apply only to retirees who have effectively retired by ending allemployment as described in Government Code §824.002 and §29.15 ofthis title (relating to Termination of Employment) and who do not re-voke retirement by becoming employed in any position by Texas pub-lic educational institutions in the month immediately following the re-tiree's effective date of retirement (or in the two months immediatelyfollowing the person's effective date of retirement if the effective dateof retirement is May 31 under §29.14 of this title (relating to Eligibilityfor Retirement at the End of May)).

§31.12. Substitute Service.(a) In this section, "substitute" means a retiree employed by a

Texas public educational institution and paid no more than the dailyrate of pay for substitutes as set by the employer to work:


(1) on a temporary basis in the place of a current em-ployee(s);

(2) in a vacant position for no more than 20 days if theretiree was not the last person to hold the vacant position and the retireehas not previously been employed in that vacant position during thesame school year; or

(3) on a temporary basis to monitor an in-person classwhile the classroom teacher temporarily instructs the class virtually.

(b) A retiree may be employed in a month solely as a substi-tute in a public educational institution without forfeiting the annuitypayment for that month.

(c) A retiree who reports for duty as a daily substitute duringany day and works any portion of that day shall be considered to haveworked one day.

(d) A disability retiree may not be employed as a substituteunder this section for more than 90 days in a school year. A disabilityretireewhoworksmore than 90 days in a substitute position shall forfeitthe disability retiree's annuity for the month during which the disabilityretiree exceeded 90 days and in each subsequent month during the sameschool year that the disability retiree is employed by a Texas publiceducational institution.

§31.13. One-half Time Employment.(a) A retiree may be employed by a Texas public educational

institution in any position, other than as a substitute, on as much as aone-half time basis without forfeiting annuity payments for the applica-ble months of employment. In this section, one-half time basis meansno more than 92 hours in a calendar month. The total number of hoursallowed for that month may be worked in any arrangement or schedule.

(b) Paid time-off, including sick leave, vacation leave, admin-istrative leave, and compensatory time for overtimeworked, is employ-ment for purposes of this section and must be included in determiningthe total amount of time worked in a calendar month and reported toTRS as employment for the calendar month in which it is taken.

(c) For the purpose of this section, employment as an instruc-tor for actual course or lab instruction with an institution of higher ed-ucation (including community and junior colleges and online course-work) in classes taken by students for college credit or classes that aretaken to prepare students for college level work shall be counted as aminimum of two clock hours for each clock hour of instruction or timein the classroom or lab in order to reflect instructional time as wellas preparation, grading, and other time typically associated with onehour of instruction. If the employer has established a greater amountof preparation time for each hour in the classroom or lab, the employer'sestablished standard will be used to determine the number of coursesor labs a retiree may teach under the exception to loss of annuity pro-vided by this section. The equivalent clock hours computed under thissubsection must be equal to or less than the number of work hours au-thorized in subsection (a) of this section for the retiree to be consideredas working on a one-half time basis.

(d) Employment as an instructor of continuing education,adult education, or classes offered to employers or businesses foremployee training, that is not measured or expressed in terms of thenumber of courses; semester or course hours/credits; or instructionalunits or other units of time rather than clock hours and for which thestudents or participants do not receive college credit, must be countedbased on the number of clock hours worked.

(e) A disability retiree may not be employed on as much as aone-half time basis under this section for more than 90 days in a schoolyear. A disability retiree who works more than 90 days on as much as

one-half time basis under this section shall forfeit the disability retiree'sannuity for the month during which the disability retiree exceeded 90days and in each subsequent month during the same school year thatthe disability retiree is employed by a Texas public educational.

(f) For the purposes of calculating the number of days workedby a disability retiree has worked during a school year under this sec-tion, working any part of a day counts as working the entire day.

§31.14. Full-time Employment after 12 Consecutive Month Break inService.

(a) A service retiree may be employed in any capacity in Texaspublic education, including as much as full-time, if the service retireehas been separated from service with all Texas public educational in-stitutions for at least 12 full, consecutive calendar months after the re-tiree's effective date of retirement. The 12-month separation periodmay be any 12 consecutive calendar months following the month ofretirement.

(b) During the separation period described by subsection (a)of this section, the service retiree may not be employed in any posi-tion or capacity by a public educational institution covered by TRS, in-cluding in any position or capacity that would qualify for an exceptionprovided for in this subchapter. Paid time off, including sick leave, va-cation leave, administrative leave, and compensatory time for overtimeworked, is considered employment for purposes of this subsection.

(c) A service retiree who is employed more than one-half timefor a Texas public educational institution will be subject to the forfei-ture requirements of §31.4 of this title (relating to Employment Result-ing in Forfeiture of Retirement Annuity) if the retiree does not meet theseparation requirements of this section and the employment does nototherwise qualify for an exception under this subchapter that permitsthe retiree to work full-time.

(d) The exception under this section does not apply to disabil-ity retirees.

§31.15. Tutors under Education Code §33.913.

(a) Except as provided by §31.18 of this title (relating to Com-bining EAR Exceptions) and subsection (b) of this section, a retireemay be employed by a Texas public educational institution in a tutoringposition that meets the requirements of Section 33.913 of the EducationCode for any number of hours or days during a month without beingsubject to the forfeiture requirements of §31.4 of this title (relating toEmployment Resulting in Forfeiture of Retirement Annuity).

(b) A disability retiree may not be employed on as a tutor un-der this section for more than 90 days in a school year. A disabilityretiree who works more than 90 days on as a tutor under this sectionshall forfeit the disability retiree's annuity for the month during whichthe disability retiree exceeded 90 days and in each subsequent monthduring the same school year that the disability retiree is employed by aTexas public educational.

(c) For the purposes of calculating the number of days workedby a disability retiree has worked during a school year under this sec-tion, working any part of a day counts as working the entire day.

§31.16. Federally-funded COVID-19 Personnel.

(a) A service retiree is not subject to thewarning, payment, andforfeiture requirements of §31.4 of this title (relating to EmploymentResulting in the Forfeiture of Retirement Annuity) if the service retireeis employed by a Texas public educational institution, other than aninstitution of higher education, in a position performing duties relatedto the mitigation of student learning loss attributable to the coronavirusdisease (COVID-19) pandemic, if the position:


(1) is in addition to the normal staffing level at the Texaspublic educational institution;

(2) is funded wholly by federal funds provided under fed-eral law enacted for the purpose of providing relief related to the coron-avirus disease (COVID-19) pandemic, including the Coronavirus Aid,Relief, and Economic Security (CARES) Act (15 U.S.C. Section 9001et seq.), Coronavirus Response and Relief Supplemental Appropria-tions Act, 2021 (Div. M, Pub. L. No. 116-260), or American RescuePlan Act of 2021 (Pub. L. No. 117-2); and

(3) ends on or before December 31, 2024.

(b) A position ends on or before December 31, 2024, if theposition no longer exists after that date or if the position is no longerfunded with the above-described federal funds after that date.

(c) This exception does not apply to disability retirees.

§31.17. Employment Up to Three Months on a One-time Trial Basis.

(a) A disability retiree may, without forfeiting payment of theretiree's monthly annuity, be employed on a one-time only trial basison as much as full-time for a period of no more than three consecutivemonths if the work meets the requirements in subsection (b) of thissection and the person complies with the requirements of subsection(c) of this section.

(b) The work must occur:

(1) in a period, designated by the employee, of no morethan three consecutive months; and

(2) in a school year that begins after the retiree's effectivedate of retirement or no earlier than October 1 if the effective date ofretirement is August 31.

(c) TRS must receive written notice of the retiree's election totake advantage of the exception described by this section. The noticemust be made on a form prescribed by TRS and filed with TRS priorto the end of the three-month trial period.

(d) Working any portion of a month counts as working a fullmonth for purposes of this section.

(e) The three-month exception permitted under this section isin addition to the 90 days of work allowed in §31.12 of this title (re-lating to Substitute Service) or §31.13 of this title (relating to One-halfTime Employment) for a disability retiree.

(f) The trial work period may occur in one school year or mayoccur in more than one school year provided the total amount of timein the trial period does not exceed three months and the months areconsecutive.

(g) A disability retiree may elect to work on a one-time onlytrial basis for as much as full time for a period of no more than threeconsecutive months for each period of disability retirement subject tothe requirements of this section.

§31.18. Combining EAR Exceptions.

(a) If, during a calendar month, a retiree works in a positionsubject to more than one exception under this subchapter or in multi-ple positions subject to different exceptions under this subchapter andthe retiree does not qualify for the twelve-month separation exceptionunder §31.14 of this title (relating to Full-time Employment after 12Consecutive Month Break in Service), TRS shall use the followingstandards to determine whether the retiree's employment still meets therequirements of each applicable exception or if the retiree is subject to§31.4 of this title (Employment Resulting in Forfeiture of RetirementAnnuity) based on that employment.

(b) If a retiree combines substitute service under §31.12 of thistitle (relating to Substitute Service) with one-half time employment un-der §31.13 of this title (relating to One-half Time Employment) in acalendar month and the retiree's employment in either position doesnot qualify for any other exceptions under this subchapter, then the re-tiree may not work more than 11 days combined during that month inthe two or more positions.

(c) If, during a calendar month, a retiree works in more thanone position and each qualifies as one-half time employment under§31.13 of this title and the retiree's employment in either position doesnot qualify for any other exceptions under this subchapter, then the re-tiree may not work more than 92 total hours in the combined positions.

(d) If a disability retiree combines substitute service under§31.12 of this title, one-half time employment under §31.13 of thistitle, or employment as a tutor under §31.15 of this title (relatingto Tutors under Education Code §33.913) in a school year, eachday worked under any of those three exceptions counts toward themaximum of 90 days that a disability retiree may work under any ofthe exceptions so that a disability retiree may never work more than atotal of 90 days combined under the three exceptions.

(e) If, during a calendar month, a retiree works more than one-half time in a position that qualifies for the tutor exception under §31.15of this title, then the retiree may not work in any other position for aTexas public educational institution without being subject to the forfei-ture requirements of §31.4 of this title unless:

(1) the other position qualifies as substitute service and allthe retiree's employment under the tutor exception under §31.15 of thistitle also qualifies as substitute service; or

(2) the other position qualifies for the tutor exception under§31.15 of this title or the COVID-19 position exception under §31.16of this title (relating to Federally-funded COVID-19 Personnel).

(f) If, during a calendar month, a retiree works in a positionthat qualifies as substitute or as one-half time or less employment andthat position also qualifies for the tutor exception under §31.15 of thistitle, then the retiree may combine work in that position with any otherwork that qualifies under the substitute exception under §31.12 of thistitle and one-half time employment under §31.13 of this title providedthe retiree's combined work during the calendar month does not exceedthe limits provided by subsection (b) and (c) of this section, as appli-cable.

(g) If, during a calendar month, a service retiree combines thefederally-funded COVID-19 position exception under §31.16 of thistitle with employment under any other exception under this subchap-ter, then the service retiree's employment under the federally-fundedCOVID-19 position exception shall be accounted for separately fromthe service retiree's employment under any other exception underthis subchapter. Hours or days worked under the federally-fundedCOVID-19 exception do not count toward or impact a retiree's em-ployment under any other exception under this subchapter.

(h) A service retiree employed under the twelve-month sep-aration exception under §31.14 of this title may be employed up tofull-time by one or more Texas public educational institutions in oneor more positions without limit under this section.

(i) If, during a calendar month, a retiree's position qualifies formore than one exception under this subchapter other than the feder-ally-funded COVID-19 exception under §31.16 of this title, the retiree'sposition shall be subject to all monthly limits on that position under allapplicable exceptions. If the limit under the applicable exceptions con-flict or if one exception is more restrictive than the other, the least re-strictive exception on a retiree's employment after retirement shall ap-


ply. If a service retiree's employment qualifies for the federally-fundedCOVID-19 exception under §31.16 of this title, it shall only be subjectto the requirements of that section.

(j) For the purposes of this section, a retiree who works part ofa day is considered to have worked the entire day.

§31.19. Combining EAR Exceptions and Employer Surcharges.

(a) If, during a calendar month, a retiree works in a positionsubject to more than one exception under this subchapter or in multi-ple positions subject to different exceptions under this subchapter, TRSshall use the following standards to determine whether the retiree's em-ployment requires an employer to pay the return-to-work pension sur-charge under §31.3 of this title (relating to Return-to-Work EmployerPension Surcharges).

(b) If a retiree combines substitute service under §31.12 of thistitle (relating to Substitute Service) with one-half time employment un-der §31.13 of this title (relating to One-half Time Employment) in acalendar month, then the employer employing the retiree must remitthe employer surcharge to TRS if the retiree works more than 11 totaldays in both positions combined.

(c) If, during a calendar month, a retiree combines substituteservice under §31.12 of this title with work that qualifies for the tutorexception under §31.15 of this title (relating to Tutors under EducationCode §33.913), then the employer must remit the employer surchargeto TRS based on that combined employment unless:

(1) all of the retiree's employment under the tutor exceptionalso qualifies as substitute service; or

(2) the retiree's non-substitute employment under the tutorexception does not exceed 92 hours in the calendar month when notcombined with the retiree's substitute service and the retiree's total em-ployment does not exceed 11 total days worked under both exceptionsduring the month.

(d) If, during a calendar month, a retiree combines one-halftime employment under §31.13 of this title with non-substitute workunder the tutor exception under §31.15 of this title, the employer mustremit the employer surcharge to TRS if the retiree works more than 92combined hours in all positions. If the retiree's employment under thetutor exception also qualifies as substitute service, then the employermust remit the employer surcharge if the retiree works more than 11total days during the month in the combined tutor position and the non-tutor one-half time position.

(e) If, during a calendar month, a service retiree combines thefederally-funded COVID-19 position exception under §31.16 of thistitle (relating to Federally-funded COVID-19 Personnel) solely withemployment that qualifies as substitute service under §31.12 of thistitle, then an employer is not required to remit an employer surchargeto TRS for that retiree.

(f) If, during a calendar month, a service retiree combines thefederally-funded COVID-19 position exception under §31.16 of this ti-tle with one-half time employment under §31.13 of this title, any hoursworked by a retiree under the federally-funded COVID-19 exceptionwill not count toward the 92 hours under the one-half time employmentexception that a retiree may work before the employer must remit theemployer surcharge.

(g) If, during a calendar month, a service retiree combines thefederally-funded COVID-19 position exception under §31.16 of thistitle with work under the full-time employment after a twelve-monthseparation exception under §31.14 of this title (relating to Full-timeEmployment after 12 Consecutive Month Break in Service), any hoursor days worked by a retiree under the federally-funded COVID-19 ex-

ception will not count toward the determination of whether the retireeworked more than 92 total hours during that month and the employersurcharge is due for that month.

(h) If, during a calendar month, a service retiree combinesnon-substitute work under either the tutor exception under §31.15 ofthis title with work under the federally-funded COVID-19 position ex-ception under §31.16 of this title, any hours or days the retiree worksunder the federally-funded COVID-19 position exception shall not becounted in determiningwhether the retiree's workedmore than 92 hoursduring the month and the employer surcharge is due for that month.

(i) If, during a calendar month, a retiree's employment in a po-sition qualifies for the federally-funded COVID-19 position exceptionunder §31.16 of this title and another exception under this subchap-ter that is subject to surcharge, work performed in that position is notsubject to surcharge so long as the work continues to qualify for thefederally-funded COVID-19 position exception.

(j) If, during a calendar month, a retiree's employment in aposition that qualifies for as substitute service under §31.12 of this titleand another exception under this subchapter that is subject to surcharge,work performed in that position is not subject to surcharge so long asthe work continues to qualify as substitute service and is not combinedwith work in another position that is subject to surcharge during thesame month.

(k) For the purposes of this section, a retiree who works partof a day is considered to have worked the entire day.



♦ ♦ ♦SUBCHAPTER C. DISABILITY RETIREECOMPENSATION LIMITS34 TAC §§31.31 - 31.33STATUTORY AUTHORITYThe proposed new rules are proposed under the authority ofGovernment Code §824.604, which provides that board oftrustees may adopt rules to administer laws under SubchapterG of Chapter 824 of the Government Code; and GovernmentCode §825.102, which authorizes the board of trustees to adoptrules for the transaction of the business of the board.CROSS-REFERENCE TO STATUTEThe proposed new rules affect the following statutes: Govern-ment Code §824.310, relating to purpose of disability benefit;limit on supplemental income; Government Code §824.601,which relates to loss of monthly benefits; and Government Code§824.602, which relates to exceptions.§31.31. Disability Retiree Report of Excess Compensation.

(a) A disability retiree who applies for disability retirementafter August 31, 2007, and whose effective date of retirement is after


August 31, 2007, shall report to TRS compensation earned for workperformed during disability retirement in accordance with this section.

(b) A disability retiree is not subject to the reporting require-ment for compensation earned in a calendar year in which the disabilityretiree's annual gross disability retirement annuity payments from TRStotal $2,000 or less.

(c) Unless excluded under subsection (a) or (b) of this section,a disability retiree is required to report to TRS compensation earnedin a calendar year when the compensation exceeds the greater of thedisability retiree's highest salary in any school year before disabilityretirement or $40,000.

(d) The reporting requirement applies to compensation earnedin the first full calendar year that begins following the effective date ofdisability retirement and to compensation earned in each subsequentcalendar year of disability retirement.

(e) Compensation that is required to be reported to TRS ispayment, earnings, or net income for employment, work, labor, or ser-vices, whether performed for a Texas public education institution oranother employer or entity. Compensation includes but is not limitedto the following:

(1) "Wages" as defined under §3121 of the Internal Rev-enue Code of 1986 that are subject to Federal Insurance ContributionsAct ("FICA") Social Security or Medicare employment taxes;

(2) Salary and wages, even if not subject to FICA taxesbecause of a technical exclusion of a type of employer or type of em-ployment;

(3) Self-employment earnings, including net income froma trade or business;

(4) Compensation for work performed as an independentcontractor;

(5) Net income earned as a sole proprietor or partner in abusiness; and

(6) Net income earned as an S corporation shareholder.

(f) A disability retiree shall submit a report required by thissection to TRS after the end of the calendar year in which the compen-sationwas earned but no later thanMay 1 of the calendar year followingthe year for which the report is due. A disability retiree shall submit allrequired information in the format designated by TRS.

(g) TRS may audit the compensation report of a disability re-tiree and require the disability retiree to provide supporting documen-tation, including copies of tax returns, W-2 forms, 1099 forms, andemployment payroll records as necessary to verify the accuracy of acompensation report.

(h) TRS may obtain information from other sources with re-gard to the compensation earned by a disability retiree in order to ad-minister applicable requirements.

(i) A report is due under this section for a calendar year inwhich one or more annuities have been forfeited pursuant to §31.32 ofthis title (relating to Forfeiture of Disability Retirement Annuity Pay-ments Due to Excess Compensation).

§31.32. Forfeiture of Disability Retirement Annuity Payments Due toExcess Compensation.

(a) If a disability retiree earned compensation in excess of theapplicable limit in §31.31(c) of this title (relating to Disability RetireeReport of Excess Compensation) in a calendar year for which a reportis due, the disability retiree's annuities shall be forfeited in accordance

with this section, beginning with the annuity payable for May of thecalendar year following the year for which the report is due.

(b) A forfeiture of annuity payments under this section shallcontinue until the disability retiree submits a new report to TRS show-ing that the compensation has ceased or decreased sufficiently that itwill no longer exceed the applicable limit. TRS will resume annuitypayments following the receipt of the retiree's new report. Annuitypayments shall be resumed no earlier than the payment for the calen-dar month following the month in which the compensation ceased ordecreased. An annuity payment is not due for a month in which a dis-ability retiree earns compensation that caused the annuity for the monthto be forfeited prior to the retiree's new report, even if the total compen-sation for the calendar year is below the applicable limit in §31.31(c)of this title.

(c) A disability retiree who forfeits one ormore annuities fromTRS is also required to pay the total monthly cost of TRS-Care cover-age as described in §41.5(f) of this title (relating to Payment of Contri-butions).

(d) Annuity payments are forfeited for a disability retiree whois required to file a report but fails to do so or for a disability retiree whofails to report all compensation required to be reported, beginning withannuity payments for the month following the month in which TRSdiscovers the failure.

(e) Nothing in this section shall be construed to prevent TRSfrom collecting the gross amount of ineligible annuity payments if TRSdetermines that a disability retiree knowingly failed to report compen-sation as required and the failure resulted in payment of annuities byTRS that the disability retiree was not eligible to receive.

(f) Forfeiture of annuity payments under this section shallnot extend the guaranteed period of annuity payments, if the disabil-ity retiree elected a payment option described under Government Code§824.308(c)(3) or (4).

§31.33. Applicability of Excess Compensation Provisions to Employ-ment in Texas Public Educational Institutions.

A disability retiree who earns compensation for employment by a pub-lic educational institution covered by TRS is subject to §31.31 of thistitle (relating to Disability Retiree Report of Excess Compensation),§31.32 of this title (relating to Forfeiture of Disability Retirement An-nuity Payments Due to Excess Compensation), and §41.5 of this title(relating to Payment of Contributions), regardless of whether the em-ployment results in the forfeiture of the annuity in the month in whichthe employment occurs, as provided for in §31.4 of this title (relatingto Employer Resulting in the Forfeiture of Retirement Annuity).



♦ ♦ ♦CHAPTER 41. HEALTH CARE ANDINSURANCE PROGRAMS


SUBCHAPTER A. RETIREE HEALTH CAREBENEFITS (TRS-CARE)34 TAC §41.4The Teacher Retirement System of Texas (TRS) proposes toamend §41.4, relating to Employer Health Benefit Surcharge,under Subchapter A (relating to Retiree Health Care Benefits(TRS-CARE)) of Chapter 41 in Part 3 of Title 34 of the Texas Ad-ministrative Code. These amendments are proposed in conjunc-tion with the proposed new rules and proposed repealed rulesunder Chapter 31 (relating to Employment After Retirement) inPart 3 of Title 34 of the Texas Administrative Code. These pro-posed new rules and proposed repeals are published elsewherein this issue of the Texas Register.BACKGROUND AND PURPOSETRS proposes to amend §41.4 (relating to Employer Health Ben-efit Surcharge) to implement new legislation passed by the 87thTexas Legislature. Specifically, the amendments to §41.4 arenecessary to implement Senate Bill 202 (SB 202) and SenateBill 288 (SB 288).SB 202 amended Government Code §825.4092 and prohibitsemployers from directly or indirectly passing on the cost of ei-ther the pension or health benefit surcharge to retirees throughpayroll deductions, fees, or any other means designed to recoverthe cost.SB 288 created new Government Code §824.6021 andamended Government Code §825.4092. These changescreated a new employment after retirement and surchargeexception for certain service retirees who are employed inpositions dedicated to mitigating learning loss caused by theCOVID-19 pandemic. Importantly, SB 288 amended Section825.4092 to not only exempt the employment of retirees frompension surcharge under Section 825.4092, but also the healthbenefit surcharge under that same section.In addition, TRS proposes to amend §41.4 to conformwith TRS'sproposed new §31.3 and §31.19 (relating to Return-to-WorkEmployer Pension Surcharge and Combining EAR Exceptionsand Employer Surcharges, respectively) that are publishedelsewhere in this edition of the Texas Register. In theseproposed new rules, TRS established a new standard for deter-mining whether a retiree is employed one-half time or less forthe purposes of when the pension surcharge is due and alsoestablishes what combinations of employment after retirementexceptions under Government Code §§824.601, 824.602, and824.6021 can trigger the pension surcharge requirement foremployers of TRS retirees. Because TRS has historically en-sured that the employment standards applicable to the pensionsurcharge also applied to the health benefit surcharge, TRSproposes to amend §41.4 to ensure it remains consistent withthe corresponding rules under Chapter 31.Lastly, TRS hasmademinor or nonsubstantive changes to §41.4in order for the language to comply with current TRS practicesor nomenclature.TRS has determined that proposed amended §41.4, if adopted,shall become effective on the same date that the proposed newand proposed repealed Chapter 31 rules become effective. TRShas proposed that the proposed newChapter 31 rules, publishedelsewhere in this issue of the Texas Register, shall become ef-fective on November 1, 2021, or on the earliest first day of a cal-

endar month after twenty days after TRS submits the adoptednew rules to the Secretary of State.FISCAL NOTEDon Green, TRS Chief Financial Officer, has determined that foreach year of the first five years the proposed amended §41.4will be in effect, there will be no foreseeable fiscal implicationsfor state or local governments as a result of administering theproposed repealed rules.PUBLIC COST/BENEFITFor each year of the first five years proposed amended §41.4 willbe in effect, Mr. Green also has determined that the public ben-efit anticipated as a result of adopting proposed amended §41.4will be that the rule will conform with recent statutory changesand TRS's proposed new rules under Chapter 31. In addition,Mr. Green has determined that the public will benefit from in-creased readability of proposed amended §41.4 if adopted.Mr. Green has also determined that the public will incur no newcosts as a result of proposed amended §41.4.ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX-IBILITY ANALYSISTRS has determined that there will be no adverse economic ef-fect on small businesses, micro-businesses, or rural communi-ties as a result of proposed amended §41.4. Therefore, neitheran economic impact statement nor a regulatory flexibility analy-sis is required under Government Code §2006.002.LOCAL EMPLOYMENT IMPACT STATEMENTTRS has determined that there will be no effect on local em-ployment because of proposed amended §41.4. Therefore, nolocal employment impact statement is required under Govern-ment Code §2001.022.GOVERNMENT GROWTH IMPACT STATEMENTTRS has determined that for the first five years the proposed re-pealed rules are in effect, proposed amended §41.4 will not cre-ate or eliminate any TRS programs; will not require the creationor elimination of employee positions; will not require an increaseor decrease in future legislative appropriations to TRS; will noteliminate any fees currently paid to TRS; will not create a newregulation; will not expand, repeal, or limit an existing regulation;will not increase or decrease the number of individuals subjectto the rule's applicability; and will not affect the state's economy.TAKINGS IMPACT ASSESSMENTTRS has determined that there are no private real property in-terests affected by proposed amended §41.4; therefore, a tak-ings impact assessment is not required under Government Code§2007.043.COSTS TO REGULATED PERSONSTRS has determined that Government Code §2001.0045 doesnot apply to proposed amended §41.4 because it does not im-pose a cost on regulated persons.COMMENTSComments may be submitted in writing to Brian Guthrie, TRSExecutive Director, 1000 Red River Street, Austin, Texas 78701-2698. Written comments must be received by TRS no later than30 days after publication of this notice in the Texas Register.STATUTORY AUTHORITY


Proposed amended §41.4 is proposed under the authority ofGovernment Code §824.604, which provides that the board oftrustees may adopt rules to administer laws under SubchapterG of Chapter 824 of the Government Code; Government Code§825.4092, which relates to employer contributions for employedretirees; and Government Code §825.102, which authorizes theboard of trustees to adopt rules for the transaction of the busi-ness of the board.CROSS-REFERENCE TO STATUTEProposed amended §41.4 affects the following statutes: Govern-ment Code §824.6021, relating to temporary exception to miti-gate learning loss attributable to COVID-19 pandemic, as en-acted by SB 288 to be effective on September 1, 2021; and Gov-ernment Code §825.4092, relating to employer contributions foremployed retirees.§41.4. Employer Health Benefit Surcharge.

(a) When used in this section, the term "employer" has themeaning given in §821.001(7), Government Code.

(b) For each report month a retiree is enrolled in TRS-Care andworking for an employer for more than 92 hours [the equivalent of fourclock hours for each work day] in that calendar month, the employerthat reports the employment of the retiree on the Employment of Re-tired Members Report to TRS shall pay monthly to the Retired SchoolEmployees Group Insurance Fund (the Fund) a surcharge establishedby the Board of Trustees of TRS.

(c) The criteria used to determine if the retiree is workingmorethan 92 hours [the equivalent of four clock hours for each work day]in that calendar month are the same as the criteria for determiningone-half time employment under §31.13 [§31.14] of this title (relatingto One-half Time Employment) even if the retiree's employment alsoqualifies for an exception under §31.14 of this title (relating to Full-timeEmployment after 12 Consecutive Month Break in Service) or §31.15of this title (relating to Tutors under Education Code §33.913).

(d) The surcharge is also owed by the employer on any retireewho is enrolled in TRS-Care, is working for a third party entity but isworking for more than 92 hours [the equivalent of four clock hours foreach work day] in that calendar month and who is considered an em-ployee of that employer under §824.601(d) of the Government Code.

(e) The surcharge under this section is not owed:

(1) by an employer for any retiree who retired from TRSbefore September 1, 2005; or

(2) by an employer for a retiree reported as working underthe exception for substitute service [Substitute Service] as provided in§31.12 [§31.13] of this title (relating to Substitute Service) unless thatretiree combines substitute service [Substitute Service] under §31.12[§31.13] of this title with other non-substitute employment with thesame or another employer or third party entity in the same calendarmonth;[. For each calendar month that the retiree combines substituteservice and other employment as described so that the work exceedsone-half time as described in §31.14(e) of this title, the surcharge isowed by each employer as provided in this section]

(3) by an employer for any retiree that is employed in mul-tiple positions during a calendar month and does not exceed the limitsfor such combined employment under §31.19 of this title (relating toCombining EAR Exceptions and Employer Surcharges); or

(4) by an employer for any service retiree that is employedin a position that qualifies as a federally-funded COVID-19 positionunder §31.16 of this title (relating to Federally-funded COVID-19 Per-sonnel) and Government Code §824.6021.

[(f) A retiree who is enrolled in TRS-Care, is working for anemployer or third party entity for more than the equivalent of four clockhours for each work day in that calendar month, and is reported on theEmployment of Retired Members Report to TRS shall inform the em-ployer of all employers of the retiree and all employers of any otherretiree enrolled under the same account identification number. An em-ployer who reports to TRS the employment of a retiree who is enrolledin TRS-Care and is working more than the equivalent of four clockhours for each work day in that calendar month shall inform TRS assoon as possible in writing of the name, address, and telephone num-ber of any other employer that employs the retiree or any other retireewho is also enrolled under the same account identification number.]

(f) [(g)] If more than one employer reports the employmentof a retiree who is enrolled in TRS-Care to TRS during any part ofa month, the surcharge under this section required to be paid into theFund by each reporting employer for that month is the total amountof the surcharge due that month divided by the number of reportingemployers. The pro rata share owed by each employer is not basedon the number of hours respectively worked by the retiree for eachemployer, nor is it based on the number of days respectively workedduring the month by the retiree for each employer.

(g) [(h)] If a retiree who is enrolled in TRS-Care is employedconcurrently by one or more employers in more than one position, thesurcharge is owed if the combined employment exceeds the limits forsuch combined employment under §31.19 of this title [is for more thanthe equivalent of four clock hours for each work day in that calendarmonth. If the employment is with more than one employer, the sur-charge will be paid according to subsection (g) of this section by eachemployer].

(h) [(i)] The employer shall maintain the confidentiality of anyinformation provided to the employer under this section and shall usethe information only as needed to carry out the purposes stated in thissection and related applicable rules or statutes.

(i) Employers shall not directly or indirectly pass the cost ofthe surcharge under this section on to the retiree through payroll deduc-tion, by imposition of a fee, or by any other means designed to recoverthe cost.



♦ ♦ ♦34 TAC §41.16The Board of Trustees of the Teacher Retirement System ofTexas (TRS) proposes new §41.16, concerning One-Time Reen-rollment Opportunity.BACKGROUND AND PURPOSEThe purpose of the proposal is to implement House Bill (H.B.)2022, 87th Legislature, Regular Session, 2021. H.B. 2022amended Insurance Code, Chapter 1575 (TRS-Care) byamending Section 1575.161, concerning Enrollment Periods, to


add new Subsections (b) and (c). The new subsections man-date the Board of Trustees create rules to provide a one-timeopportunity to reenroll in a health benefit plan offered underTRS-Care for an otherwise eligible retiree and provides that thenew subsections expire September 1, 2024.Proposed new §41.16, One-Time Reenrollment Opportunity, re-states the eligibility requirements of new Section 1575.161(c);defines "eligible to enroll in Medicare"; addresses dependents;provides reenrollment will take effect on the first day of the monthfollowing the month in which TRS receives the written request;and provides that the new rule will expire September 1, 2024,unless extended by legislative action.FISCAL NOTEDon Green, TRS Chief Financial Officer, has determined thatfor each year of the first five years the proposed amended rulewill be in effect, there will be no foreseeable fiscal implicationsfor state or local governments as a result of administering theproposed new rule.PUBLIC COST/BENEFITFor each year of the first five years the proposed new rule will bein effect, Mr. Green also has determined that the public benefitanticipated as a result of adopting the new rule will be to rem-edy the adverse effects changes to the plans during the periodof January 1, 2017 and December 31, 2019, may have had onmember choice to leave the plan during that timeframe by givingthe members a one-time opportunity to reenroll in the plan. Mr.Green has also determined that there is no economic cost to en-tities or persons required to comply with the proposed new rule.ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX-IBILITY ANALYSISTRS has determined that there will be no adverse economic ef-fect on small businesses, micro-businesses, or rural communi-ties as a result of the proposed amendments. Therefore, neitheran economic impact statement nor a regulatory flexibility analy-sis is required under Government Code §2006.002.LOCAL EMPLOYMENT IMPACT STATEMENTTRS has determined that there will be no effect on local employ-ment because of the proposed new rule. Therefore, no local em-ployment impact statement is required under Government Code§2001.022.GOVERNMENT GROWTH IMPACT STATEMENTTRS has determined that for the first five years the proposed newrule is in effect, the proposed new rule will not create or eliminateany TRS programs; will not require the creation or elimination ofemployee positions; will not require an increase or decrease infuture legislative appropriations to TRS; will not eliminate anyfees currently paid to TRS; will not create a new regulation; willnot expand, limit or repeal an existing regulation; will not increaseor decrease the number of individuals subject to the rule's appli-cability; and will not affect the state's economy.TAKINGS IMPACT ASSESSMENTTRS has determined that there are no private real propertyinterests affected by the proposed new rule; therefore, a takingsimpact assessment is not required under Government Code§2007.043.COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 doesnot apply to the proposed new rule because it does not imposea cost on regulated persons.COMMENTSComments may be submitted in writing to Brian Guthrie, TRSExecutive Director, 1000 Red River Street, Austin, Texas 78701-2698. Written comments must be received by TRS no later than30 days after publication of this notice in the Texas Register.STATUTORY AUTHORITYThe new rule is proposed under the authority of Chapter 1575,Insurance Code, which establishes the Texas Public SchoolEmployees Group Benefits Program (TRS-CARE), §1575.052,which allows the trustee to adopt rules, plans, procedures,and orders reasonably necessary to implement Chapter 1575;Chapter 825, Texas Government Code, which governs the ad-ministration of TRS, and §825.102, which authorizes the boardof trustees to adopt rules for the transaction of the business ofthe board.CROSS-REFERENCE TO STATUTEThe proposed new rule affects §1575.161, Insurance Code, con-cerning Enrollment Periods.§41.16. One-Time Reenerollment Opportunity.

(a) A retiree who was enrolled in TRS-Care and voluntarilyterminated the retiree's enrollment between January 1, 2017, and De-cember 31, 2019, will have a one-time opportunity to reenroll in TRS-Care if the retiree is otherwise eligible and meets the following require-ments:

(1) The retiree is eligible to enroll in Medicare at the timethe retiree applies for reenrollment in TRS-Care; and

(2) The retiree applies for reenrollment into TRS-Care nolater than December 31, 2023.

(b) A retiree will be considered eligible to enroll in Medicarefor purposes of subsection (a)(1) of this section if at the time the retireeapplies for reenrollment into TRS-Care, the retiree is eligible to enrollin the Medicare Advantage plan offered under TRS-Care, according toSection 1575.1582(b) of the Insurance Code.

(c) If the retiree's application to reenroll under this section isapproved, the retiree will be able to enroll in TRS-Care any eligibledependents.

(d) If the retiree who was enrolled in TRS-Care and voluntar-ily terminated the retiree's enrollment between January 1, 2017 and De-cember 31, 2019 has since passed away, the retiree's surviving spouseor the retiree's surviving dependent child will be eligible to enroll un-der this section, as long as:

(1) The surviving spouse or surviving dependent childqualifies as such under Section 1575.003 of the Insurance Code;

(2) The surviving spouse or surviving dependent child iseligible to enroll in Medicare at the time the person applies for enroll-ment, according to subsection (b) of this section; and

(3) The surviving spouse or surviving dependent child ap-plies for enrollment into TRS-Care no later than December 31, 2023.If a surviving spouse's application for enrollment under this subsectionis approved, the surviving spouse will be able to elect to enroll any el-igible surviving dependent child as a dependent.


(e) The effective date of coverage in the TRS-Care plan underthis section will be the first day of the month after TRS receives thewritten request from the eligible person to enroll.

(f) This section will expire on September 1, 2024, unless theone-time reenrollment opportunity is extended by legislative action, inwhich case this section will remain in place until such one-time reen-rollment opportunity expires according to such legislative action.



♦ ♦ ♦SUBCHAPTER C. TEXAS SCHOOLEMPLOYEES GROUP HEALTH (TRS-ACTIVECARE)34 TAC §§41.30, 41.34, 41.36, 41.37, 41.45The Board of Trustees of the Teacher Retirement System ofTexas (TRS) proposes amendments to §41.30, concerningParticipation in the Health Benefit Program under the TexasSchool Employees Uniform Group Health Coverage Act bySchool Districts, Other Educational Districts, Charter Schools,and Regional Education Service Centers; §41.34, concerningEligibility for Coverage under the Texas School EmployeesUniform Group Health Coverage Program; §41.36, concerningEnrollment Periods for TRS-ActiveCare; 34 TAC §41.37, con-cerning Effective Date of Coverage; and §41.45, concerningRequired Information from School Districts with More than 1,000Employees.BACKGROUND AND PURPOSEThe purpose of the proposed amendments is to implementSenate Bill (S.B.) 1444, 87th Legislature, Regular Session,2021. S.B. 1444 amended Insurance Code, Chapter 1579(TRS-ActiveCare) by adding §1579.1045 relating to alternativegroup health coverage prohibition and §1579.155 relating toprogram participation: election. New §1579.1045 of the Insur-ance Code clarifies that participating entities are prohibited fromoffering alternative group health coverage. New §1579.155 ofthe Insurance Code allows, effective on September 1, 2022,entities to elect to participate or discontinue participation inTRS-ActiveCare by providing written notice to TRS not later thanDecember 31 of the year preceding the first day of the plan yearin which the election will be effective; prohibits a participatingentity that elects to discontinue participation in TRS-ActiveCarefrom electing to participate in the TRS-ActiveCare again until thefifth anniversary after the effective date of the entity's electionto discontinue participation; and prohibits an entity that electsto participate in TRS-ActiveCare from discontinuing the entity'sparticipation until the fifth anniversary of the effective date of theentity's election to participate.

Proposed amendments to §41.30 adds a subsection to addressto whom the section is applicable; clarifies that an entity'smandatory notice of election to join TRS-ActiveCare will not beconsidered complete without the submission of the informationrequired under §41.45; establishes the timing and process forjoining and leaving TRS-ActiveCare; codifies the prohibitionon offering alternative group health coverage; and identifiesremedies for failure to comply with the statutes and rules.Proposed amendments to §41.34 provide that individuals receiv-ing COBRA continuation coverage under an alternative grouphealth plan being offered concurrently with TRS-ActiveCare willnot receive continuing COBRA coverage under TRS-ActiveCareif the participating entity terminates the alternative plan or is ter-minated from TRS-ActiveCare for violating Section 1579.1045 ofthe Insurance Code.Proposed amendments to §41.36 modify the initial employee en-rollment period for employees of a new participating entity in or-der to be consistent with the new language in §41.30.Proposed amendments to §41.37 modify the effective date foremployee coverage in order to be consistent with the new lan-guage in §41.30.Proposed amendments to §41.45 make the submission of re-quired information applicable to all entities, not just to SchoolDistricts with More than 1,000 Employees; clarify that this infor-mation is required to be provided at the same time as the noticeof election and that failure to provide it will result in an incompleteelection; adds additional information requirements.FISCAL NOTEDon Green, TRS Chief Financial Officer, has determined thatfor each year of the first five years the proposed amended rulewill be in effect, there will be no foreseeable fiscal implicationsfor state or local governments as a result of administering theproposed amended rule.PUBLIC COST/BENEFITFor each year of the first five years the proposed amended rulewill be in effect, Mr. Green also has determined that the publicbenefit anticipated as a result of the adopting the amended rulewill be to implement SB 1444 which gives entities the flexibilityto join and leave TRS-ActiveCare and provides more stabilityfor TRS-ActiveCare by clarifying that participating entities cannotoffer alternative healthcare coverage plans. Mr. Green has alsodetermined that there is no economic cost to entities or personsrequired to comply with the proposed amended rule.ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX-IBILITY ANALYSISTRS has determined that there will be no adverse economic ef-fect on small businesses, micro-businesses, or rural communi-ties as a result of the proposed amendments. Therefore, neitheran economic impact statement nor a regulatory flexibility analy-sis is required under Government Code §2006.002.LOCAL EMPLOYMENT IMPACT STATEMENTTRS has determined that there will be no effect on local employ-ment because of the proposed amended rule. Therefore, no lo-cal employment impact statement is required under GovernmentCode §2001.022.GOVERNMENT GROWTH IMPACT STATEMENT


TRS has determined that for the first five years the proposedamended rule is in effect, the proposed amendments will not cre-ate or eliminate any TRS programs; will not require the creationor elimination of employee positions; will not require an increaseor decrease in future legislative appropriations to TRS; will noteliminate any fees currently paid to TRS; will not create a newregulation; will not expand, limit or repeal an existing regulation;will not increase or decrease the number of individuals subjectto the rule's applicability; and will not affect the state's economy.TAKINGS IMPACT ASSESSMENTTRS has determined that there are no private real property in-terests affected by the proposed amended rule, therefore, a tak-ings impact assessment is not required under Government Code§2007.043.COSTS TO REGULATED PERSONSTRS has determined that Government Code §2001.0045 doesnot apply to the proposed amended rule because it does notimpose a cost on regulated persons.COMMENTSComments may be submitted in writing to Brian Guthrie, TRSExecutive Director, 1000 Red River Street, Austin, Texas 78701-2698. Written comments must be received by TRS no later than30 days after publication of this notice in the Texas Register.STATUTORY AUTHORITYThe amendments are proposed under the authority of InsuranceCode §1579.052, which allows the trustee to adopt rules relat-ing to the program as considered necessary by the trustee andrequires the trustee to take the actions it considers necessaryto devise, implement, and administer the program; and Chapter825, Texas Government Code, which governs the administra-tion of TRS, §825.102, which authorizes the board of trustees toadopt rules for the transaction of the business of the board.CROSS-REFERENCE TO STATUTEThe proposed amendments affect Chapter 1579, InsuranceCode, which establishes the Texas School Employees UniformGroup Health Coverage (TRS-ActiveCare), §1579.1045 relatingto alternative group health coverage prohibition; and §1579.155relating to program participation: election.§41.30. Participation in the Health Benefits Program under the TexasSchool Employees UniformGroup Health Coverage Act by School Dis-tricts, Other Educational Districts, Charter Schools, and Regional Ed-ucation Service Centers.

(a) Applicability. This section is applicable to the election toparticipate in TRS-ActiveCare by eligible entities such as school dis-tricts, other educational districts, charter schools, and regional educa-tion service centers, as these terms are defined in Chapter 1579, Insur-ance Code.

(b) [(a)] Manner, form and effect of election.

(1) Form of the notice of election. All elections to partic-ipate or discontinue participation in the health benefits program, re-ferred to as "TRS-ActiveCare," under the Texas School EmployeesUniform Group Health Coverage Act (the "Act"), Chapter 1579, In-surance Code, shall be in writing, in a form prescribed by the TeacherRetirement System of Texas (TRS), as trustee of TRS-ActiveCare.

(2) Incomplete notice of election. An incomplete orunsigned notice of election will not be deemed received by TRS forpurposes of determining whether a valid election has been exercised.

Written notice of election to participate in TRS-ActiveCare underthis section submitted without the information required under §41.45of this title (relating to Required Information from School Districts,Other Educational Districts, Charter Schools, and Regional EducationService Centers Electing to Participate in TRS-ActiveCare) will beconsidered incomplete and will be denied by TRS. In order to reducethe possibility of submitting an incomplete form, entities should reachout to TRS before the election deadline referenced in this section toask questions and address issues.

(3) [(2)] Timing of the receipt of the notice of election. Anotice of election to participate or discontinue participation that is oth-erwise valid must be received by TRS no later than December 31 of theyear preceding the first day of the plan year in which the election willbe effective [on or prior to the tenth (10th) business day before the firstday of the enrollment period established under §41.36 of this title forthe entity seeking to join TRS-ActiveCare].

[(3) Time of the receipt of a notice of revocation. In orderto revoke a valid election to participate in TRS-ActiveCare, a writtennotice of revocation, signed by the entity that filed the valid election,must be received by TRS no later than the tenth (10th) business daybefore the first day of the enrollment period established under §41.36 ofthis title for the entity. There is no particular form required for a writtennotice of revocation. However, an unsigned notice of revocation willnot be deemed received by TRS for purposes of determining whethera valid revocation has been exercised.]

(4) Mandatory Participation and Exclusion Timeframes.Each time an entity submits a notice of election to participate inTRS-ActiveCare in accordance with subsection (b)(1) - (3) of thissection, the entity is committing to participate for a minimum of fiveplan years, after which the entity may choose to submit a notice todiscontinue participation. In the same manner, each time an entitysubmits a notice to discontinue participation in TRS-ActiveCare inaccordance with subsection (b)(1) - (3) of this section, the entity iscommitting to leave the program for a minimum of five plan years,after which the entity may choose to submit a notice of election toparticipate. Mandatory participation and mandatory exclusion periodswill be strictly enforced.[Discontinuance of participation. Entities thatparticipate in TRS-ActiveCare may not discontinue participation un-less authorized by Chapter 1579, Insurance Code, and by appropriaterule or resolution adopted by the TRS Board of Trustees.]

[(b) School districts with 500 or fewer employees. Pursuant to§1579.151(a), Insurance Code, school districts with 500 or fewer em-ployees as of January 1, 2001 were required to participate effectiveSeptember 1, 2002 in TRS-ActiveCare, except that certain of theseschool districts were authorized to delay or opt out of participationby specified election deadline dates. With regard to a school districtthat opted out of participation in TRS-ActiveCare pursuant to either§1579.151(b) or §1579.153(c), Insurance Code, as those provisions ex-isted at the time the school district opted out, subsection (h) of this sec-tion provides the method for such a school district to change its elec-tion.]

[(c) School districts with 501 or more employees but not morethan 1000 employees. School districts with 501 or more employeesbut not more than 1000 employees at any time during the 2001 schoolyear, as reflected on any report received by TRS for a reporting periodduring that school year may elect to participate in TRS-ActiveCare inthe manner prescribed in subsection (h) of this section.]

[(d) School districts with 1001 or more employees. A schooldistrict with 1001 or more employees at any time during the 2001school year, as reflected on any report received by TRS for a reportingperiod during that school year, may elect to participate in TRS-Active-


Care by filing a notice of election in compliance with subsection (a) ofthis section, in which event the school district will become a partici-pating entity on the later of the first day of the month following six (6)months from the date on which TRS receives the notice of election ora preferred date specified by the school district in its notice of election.Alternatively, the district will become a participating entity effective onthe date approved by the executive director, if applicable, as describedin subsection (i) of this section.]

[(e) Educational districts. Pursuant to §1579.151(c), Insur-ance Code, educational districts whose employees are members of TRSare required to participate effective September 1, 2002 in TRS-Active-Care, except that educational districts with 500 or fewer employees onJanuary 1, 2001 were allowed to opt out of participation. September 1,2001 was the deadline for such an educational district to file its noticeof election with TRS to opt out of participation in TRS-ActiveCare.Subsection (h) of this section provides the method for an educationaldistrict to change its election.]

(c) [(f)] Charter schools. [Pursuant to §1579.154, InsuranceCode, an open-enrollment charter school established under Chapter 12,Subchapter D, Education Code, ("charter school") may elect to partic-ipate in TRS-ActiveCare by complying with both paragraphs (1) and(2) of this subsection. Only an eligible charter school under the Actmay elect to participate.]

[(1)] Pursuant to §1579.154(a), Insurance Code, to be el-igible, a charter school must agree to inspection of all records of theschool relating to its participation in TRS-ActiveCare by TRS, by theadministering firm as defined in §1579.002(1), Insurance Code, by thecommissioner of education, or by a designee of any of those entities,and further must agree to have its accounts relating to participation inTRS-ActiveCare annually audited by a certified public accountant atthe school's expense. The agreement of the charter school shall be evi-denced in writing and shall constitute a part of a notice of election in aform prescribed by TRS pursuant to subsection (b) [(a)] of this section.

[(2) Eligible charter schools may elect to participate inTRS-ActiveCare by filing a notice of election in compliance withsubsection (a) of this section, in which event:]

[(A) the charter school will become a participating en-tity on the later of the first day of the month following six (6) monthsfrom the date on which TRS receives the notice of election or a pre-ferred date specified by the charter school in its notice of election; or]

[(B) alternatively, the eligible charter school will be-come a participating entity effective on the date approved by the ex-ecutive director, if applicable, as described in subsection (i) of this sec-tion.]

[(g) Regional education service centers. Pursuant to§1579.151(a), Insurance Code, each regional education service centerestablished under Chapter 8, Education Code, is required to participateeffective September 1, 2002 in TRS-ActiveCare.]

[(h) School districts that opted out of participation in TRS-Ac-tiveCare as described in subsection (b) or (c) of this section and edu-cational districts that opted out of participation in TRS-ActiveCare asdescribed in subsection (e) of this section may elect to participate inTRS-ActiveCare by filing a notice of election in compliance with sub-section (a) of this section, in which event the school district will becomea participating entity on the later of the first day of the month followingsix (6) months from the date on which TRS receives the notice of elec-tion or a preferred date specified by the school district in its notice ofelection. Alternatively, the district will become a participating entityeffective on the date approved by the executive director, if applicable,as described in subsection (i) of this section.]

(d) [(i)] Effective Date of Participation or Discontinuation ofParticipation. An entity [that] will become a participating entity or dis-continue to be a participating entity in TRS-ActiveCare on the first dayof the plan year [month] following [six (6) months after] the December31st date on which TRS receives the entity's notice of election [butdesires] to become a participating entity or discontinue being a partic-ipating entity referenced in subsection (b) of this section.[on an earlierdate may include in its notice of election a request that the executivedirector consider an exception to the notice requirement. The noticeof election must include the earlier date on which the entity desires itscoverage to begin. The executive director will grant the exception if, inhis or her sole discretion, upon considering the following criteria, he orshe finds that an exception is in the best interest of TRS-ActiveCare:]

[(1) the impact on the requesting entity's employees anddependents;]

[(2) the impact on the health plan administrator of TRS-ActiveCare;]

[(3) the impact on the provider network of TRS-Active-Care;]

[(4) the number of potential enrollees that would be cominginto TRS-ActiveCare for the first time on the same date; and]

[(5) the impact on TRS-ActiveCare as a whole, taking intoaccount any recommendations and observations of TRS's health careconsultant.]

(e) Alternative group health coverage prohibition. In accor-dance with Section 1579.1045, Insurance Code, a participating entityis prohibited from offering or making available group health coverageother than that provided under the TRS-ActiveCare program to the en-tity's employees or their employees' dependents.

(f) Remedies for failure to comply. If, contrary to subsection(e) of this section and Section 1579.1045 of the Insurance Code, a par-ticipating entity offers alternative group health coverage, TRSmay pur-sue remedies for noncompliance, including but not limited to removalfrom or denial of entry into TRS-ActiveCare. TRS may impose or pur-sue one or more remedies. The pursuit of one remedy does not consti-tute a waiver of any other remedy that TRS may have at law or equity.If TRS discovers that a participating entity is in violation of subsection(e) after the beginning of a plan year, in addition to any other avail-able remedy, TRS will remove the entity from the program effectiveat the end of the month in which TRS discovers the situation; and itwill be the entity's liability to procure alternative coverage or provideother remedies for the employees and their dependents that lose cover-age under these circumstances.

§41.34. Eligibility for Coverage under the Texas School EmployeesUniform Group Health Coverage Program.The following persons are eligible to be enrolled in TRS-ActiveCareunder terms, conditions and limitations established by the trustees un-less expelled from the program under provisions of Chapter 1579, In-surance Code:

(1) A full-time employee as defined in §41.33 of this title(relating to Definitions Applicable to the Texas School Employees Uni-form Group Health Coverage Program).

(2) A part-time employee as defined in §41.33 of this title.

(3) Dependents, as defined in §41.33 of this title pursuantto §1579.004, Insurance Code. A child defined in §1579.004(3), Insur-ance Code, who is 26 years of age or older, is eligible for coverage onlyif, and only for so long as, such child's mental disability or physical in-capacity is a medically determinable condition that prevents the childfrom engaging in self-sustaining employment as determined by TRS.


(4) Individuals employed or formerly employed by a par-ticipating entity, and their dependents, who are eligible for, or par-ticipating in, continuation coverage under the Consolidated OmnibusBudget Reconciliation Act of 1985 (Pub. L. 99-272), through a grouphealth benefit plan sponsored by the individual's employer on the firstday that employer first becomes a participating entity if such indi-viduals or their dependents would have met the requirements for el-igibility in paragraphs [paragraph] (1), (2), or (3) of this section onthe individual's last day of employment with the participating entity.Notwithstanding the foregoing, the individual is eligible to participatein TRS-ActiveCare only for the rest of the duration of the individual'seligibility for COBRA continuation coverage. This subsection will notapply to individuals that receive COBRA continuation coverage of-fered through an alternative group health plan coverage offered by aparticipating entity at the same time that the entity is offering cover-age through TRS-ActiveCare, and the participating entity terminatesthe alternative group health plan coverage, or the participating entity isterminated from the program by TRS for violating Section 1579.1045,Insurance Code, and §41.30(e) of this title (relating to Participation inthe Health Benefits Program under the Texas School Employees Uni-form Group Health Coverage Act by School Districts, Other Educa-tional Districts, Charter Schools, and Regional Education Service Cen-ters).

(5) An individual who qualifies for coverage pursuant to§41.38(b) of this title (relating to Termination Date of Coverage), andtheir dependents.

(6) Full-time or part-time employees as defined in §41.33of this title and their eligible dependents may participate in an approvedHMO if they reside, live, or work in the approved service area of theHMO and are otherwise eligible to participate in the HMO under theterms of the TRS contract with the HMO.

(7) Individuals who become eligible as determined by TRSfor continuation coverage under the Consolidated Omnibus BudgetReconciliation Act of 1985 (Pub. L. No. 99-272), through their partic-ipation in TRS-ActiveCare.

(8) Individuals who become eligible for coverage under thespecial enrollment provisions of the Health Insurance Portability andAccountability Act of 1996 (Pub. L. No. 104-191, 110 Stat. 1936(1996)).

(9) Any other individuals who are required to be coveredunder applicable law.

§41.36. Enrollment Periods for TRS-ActiveCare.

(a) An individual who becomes an eligible full-time or eligiblepart-time employee has an initial enrollment period, for both himselfor herself as well as for his or her eligible dependents, beginning on thefirst day that the individual becomes an eligible employee and endingat 11:59:59 p.m. Austin Time on the 31st day thereafter.

(b) If a current employee of a participating entity was an eli-gible part-time employee during an enrollment opportunity for the cur-rent plan year, and, later during the current plan year, this employee be-comes an eligible full-time employee, then this employee has an enroll-ment period, for both himself or herself as well as for his or her eligibledependents, beginning on the first day that this individual becomes aneligible full-time employee and ending at 11:59:59 p.m. Austin Timeon the 31st day thereafter. This enrollment opportunity exists even ifthis employee previously declined enrollment in TRS-ActiveCare dur-ing the current plan year.

(c) An eligible full-time or part-time employee whose em-ployer becomes a participating entity has an initial enrollment period,for both himself or herself as well as for his or her eligible dependents,

beginning at least [no later than] 31 days prior to the date that theannual enrollment period ends for the first plan year in [on] whichthe employer becomes a participating entity. [and ending on the lastcalendar day of the month immediately preceding the date on whichthe employer becomes a participating entity ("end date"). Notwith-standing the preceding sentence, a large school district, as definedhereafter, that becomes a participating entity after September 1, 2003,may recommend an initial enrollment period of not less than 31 daysthat closes before the end date. A recommended initial enrollmentperiod that closes before the end date is subject to approval by TRS.As used in this section, a large school district shall mean a schooldistrict that had 1001 or more employees at any time during the 2001school year, as reflected on any report received by TRS from thatschool district for a reporting period in that school year.]

(d) A full-time or part-time employee's eligible dependents, ifcovered, must be enrolled in the same coverage plan as the full-time orpart-time employee under whom they qualify as a dependent. Exceptas otherwise provided under applicable state or federal law, an eligiblefull-time or part-time employee may not change coverage plans or adddependents during a plan year.

(e) The enrollment period for an individual who becomes el-igible for coverage due to a special enrollment event, as described in§41.34(8) of this chapter (relating to Eligibility for Coverage under theTexas School Employees Uniform Group Health Coverage Program),shall be the 31 calendar days immediately after the date of the specialenrollment event. To make an effective election, a completed enroll-ment form must be received by a participating entity or the health planadministrator of TRS-ActiveCare within this 31-day period.

(f) Eligible full-time and part-time employees and their eligi-ble dependents who are enrolled in an HMO with a TRS contract thatis not renewed for the next plan year may make one of the electionsprovided under this subsection. To make an effective election, a com-pleted enrollment form must be received by a participating entity orthe health plan administrator of TRS-ActiveCare during the plan en-rollment period. Coverage under the elected option becomes effectiveon September 1 of the next plan year. One of the following electionsmay be made under this subsection:

(1) change to another approved HMO for which the full-time or part-time employee is eligible; or

(2) enroll in the TRS-ActiveCare preferred provider organ-ization coverage plan, without preexisting condition exclusions.

(g) Eligible full-time or part-time employees and their eligibledependents who are enrolled in an HMOwith a TRS contract that is ter-minated during the plan year may make one of the elections providedunder this subsection. To make an effective election, a completed en-rollment form must be received by a participating entity or the healthplan administrator of TRS-ActiveCare within 31 calendar days afternotice of the contract termination is sent to the eligible full-time orpart-time employee by TRS or its designee. Coverage under the electedoption becomes effective on a date determined by TRS. One of the fol-lowing elections may be made under this subsection:

(1) change to another approved HMO for which the full-time or part-time employees and their eligible dependents are eligible;or

(2) enroll in the TRS-ActiveCare preferred provider organ-ization coverage plan, without preexisting condition exclusions.

(h) Eligible full-time or part-time employees and their eligi-ble dependents enrolled in an approved HMO whose eligibility statuschanges because the eligible full-time or part-time employee no longerresides, lives, or works in the HMO service area may make one of the


elections provided under this subsection. Tomake an effective election,a completed enrollment form must be received by a participating entityor the health plan administrator of TRS-ActiveCare within 31 calendardays after the employee's change in eligibility status. Coverage underthe elected option becomes effective on the first day of the month fol-lowing the date the employee's eligibility status changed. One of thefollowing elections may be made under this subsection:

(1) enroll in another approvedHMO forwhich the full-timeor part-time employee is eligible; or

(2) enroll in the TRS-ActiveCare preferred provider organ-ization coverage plan, subject to applicable preexisting condition lim-itations.

(i) On behalf of the trustee, the executive director or a designeemay prescribe open-enrollment periods and the conditions under whichan eligible full-time or part-time employee and his eligible dependentsmay enroll during an open-enrollment period.

§41.37. Effective Date of Coverage.

(a) Except as otherwise provided by §41.39 of this title (relat-ing to Coverage for Individuals Changing Employers) coverage shallbecome effective as described in this subsection for eligible full-timeemployees and eligible part-time employees whose employer first be-comes a participating entity [after September 1, 2002,] and who enrollduring the annual enrollment period. [no later than the last calendarday of the month] immediately preceding the date their employer firstbecomes a participating entity [or no later than the last day of an ap-proved initial enrollment period for a large school district as providedby §41.36 of this title (relating to Enrollment Periods for TRS-Active-Care)]. Coverage shall become effective for such individuals and theireligible dependents on the first day of the plan year [date] the employerfirst became a participating entity.

(b) Except as otherwise provided by §41.39 of this title (relat-ing to Coverage for Individuals Changing Employers) coverage shallbecome effective as described in this subsection for eligible full-timeemployees and eligible part-time employees who begin working for aparticipating entity in an eligible capacity [after August 31, 2002,] andwho enroll no later than the 31st day after the first date they becomeeligible to enroll, ("Individuals"). Coverage shall become effective forsuch Individuals and their eligible dependents on one of the followingdates as specified by the Individual on the application for coverage:

(1) The first day the Individual is employed in an eligiblecapacity with the participating entity; or

(2) The first day of the calendar month following themonthin which the Individual is employed in an eligible capacity with theparticipating entity.

(c) For eligible full-time employees, eligible part-timeemployees and their eligible dependents who enroll during an open-en-rollment period as prescribed by the trustee, coverage shall becomeeffective on the date specified by resolution of the trustee.

§41.45. Required Information from School Districts, Other Educa-tional Districts, Charter Schools, and Regional Education ServiceCenters Electing to Participate in TRS-ActiveCare [with More than1,000 Employees].

(a) An eligible entity that submits a written election to partic-ipate in TRS-ActiveCare under §41.30 must include with the notice ofelection [No later than 30 calendar days after a large school district, asdefined in subsection (b) of this section, submits its notice of election tobecome a participating entity in TRS-ActiveCare, the large school dis-trict must submit to TRS] the information listed below [in the followingparagraphs] for each medical and prescription drug plan that the entity

[large school district] offered to its employees during the designatedtime period. The entity [Large school districts] must include this infor-mation for the year to date for the plan year in which the entity [largeschool district] submits its notice of election (current year) and for thetwo complete plan years immediately preceding the current year. Therequired information is:

(1) Plan type (PPO, POS, HMO, etc.), including the effec-tive date of each plan;

(2) Average number of employees participating in eachplan;

(3) Average number of covered lives in each plan;

(4) Description of all medical and prescription drug bene-fits, including effective dates of any changes in each plan;

(5) Total premium rates by family tier for each insuredplan, including effective dates of any changes;

(6) Total COBRA rates by family tier for each self-fundedplan, including effective dates of any changes;

(7) Required employee contribution rates by family tier foreach plan, including effective dates of any changes;

(8) Funding arrangement (fully insured, self-funded, etc.)for each plan;

(9) Total premiums paid by year for each plan, if insured;[and]

(10) Total claims paid by year for each plan;[.]

(11) Employee counts by age, gender, and participation sta-tus;

(12) A high cost claimant report; and

(13) Any other summary health information that TRS mayrequire.

(b) Written notices of election to participate in TRS-Active-Care under §41.30 without the information required under this sec-tion will be considered incomplete and will be denied by TRS. Entitlesshould reach out to TRS before the election deadline in §41.30 to askquestions and address issues related to the information that is requiredunder this section. [For purposes of this section, a large school districtmeans a school district that had 1001 or more employees at any timeduring the 2001 school year, as reflected on any report received by TRSfrom that school district for a reporting period in that school year.]

[(c) If a large school district cannot obtain the information re-quired under subsection (a) of this section, the large school district mustobtain a letter from the insurer or third-party administrator stating thatthe insurer or third-party administrator cannot legally provide that in-formation to the large school district. The large school district mustsubmit that letter to TRS in lieu of the requested information in sub-section (a) of this section.]

(c) [(d)] TRS will not deny an entity's [a large school district's]request to participate in TRS-ActiveCare based on any information pro-vided to TRS in accordance with the requirements of this section.

[(e) TRS may delay a large school district's effective date ofparticipation in TRS-ActiveCare if the school district does not providethe information required by this section within the time frames pre-scribed in subsection (a) of this section.]

(d) [(f)] TRS may prescribe the form in which entities [largeschool districts] must submit the information required by this section.



Filed with the Office of the Secretary of State on August 2, 2021.TRD-202103001Don GreenChief Financial OfficerTeacher Retirement System of TexasEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 542-6292

♦ ♦ ♦34 TAC §41.35The Board of Trustees of the Teacher Retirement System ofTexas (TRS) proposes amendments to §41.35, concerning Cov-erage Plans.BACKGROUND AND PURPOSEThe purpose of the proposed amendments is to clarify TRS ratesetting procedures. Proposed amendments to §41.35 providesthat TRSmay determine different rates and premiums applicableto entities or potential entities based on specific risks, regionalfactors, and other underwriting considerations.FISCAL NOTEDon Green, TRS Chief Financial Officer, has determined thatfor each year of the first five years the proposed amended rulewill be in effect, there will be no foreseeable fiscal implicationsfor state or local governments as a result of administering theproposed amended rule.PUBLIC COST/BENEFITFor each year of the first five years the proposed amended rulewill be in effect, Mr. Green also has determined that the pub-lic benefit anticipated as a result of the adopting the amendedrule will be to remedy minor issues identified in the most recentelection and to ensure the rule is consistent with current TRSelection practices. Mr. Green has also determined that there isno economic cost to entities or persons required to comply withthe proposed amended rule.ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX-IBILITY ANALYSISTRS has determined that there will be no adverse economic ef-fect on small businesses, micro-businesses, or rural communi-ties as a result of the proposed amendments. Therefore, neitheran economic impact statement nor a regulatory flexibility analy-sis is required under Government Code §2006.002.LOCAL EMPLOYMENT IMPACT STATEMENTTRS has determined that there will be no effect on local employ-ment because of the proposed amended rule. Therefore, no lo-cal employment impact statement is required under GovernmentCode §2001.022.GOVERNMENT GROWTH IMPACT STATEMENTTRS has determined that for the first five years the proposedamended rule is in effect, the proposed amendments will not cre-ate or eliminate any TRS programs; will not require the creationor elimination of employee positions; will not require an increaseor decrease in future legislative appropriations to TRS; will noteliminate any fees currently paid to TRS; will not create a new

regulation; will not expand, limit or repeal an existing regulation;will not increase or decrease the number of individuals subjectto the rule's applicability; and will not affect the state's economy.TAKINGS IMPACT ASSESSMENTTRS has determined that there are no private real property in-terests affected by the proposed amended rule, therefore, a tak-ings impact assessment is not required under Government Code§2007.043.COSTS TO REGULATED PERSONSTRS has determined that Government Code §2001.0045 doesnot apply to the proposed amended rule because it does notimpose a cost on regulated persons.COMMENTSComments may be submitted in writing to Brian Guthrie, TRSExecutive Director, 1000 Red River Street, Austin, Texas 78701-2698. Written comments must be received by TRS no later than30 days after publication of this notice in the Texas Register.STATUTORY AUTHORITYThe amendments are proposed under the authority of InsuranceCode §1579.052, which allows the trustee to adopt rules relat-ing to the program as considered necessary by the trustee andrequires the trustee to take the actions it considers necessaryto devise, implement, and administer the program; and Chapter825, Texas Government Code, which governs the administra-tion of TRS, §825.102, which authorizes the board of trustees toadopt rules for the transaction of the business of the board.CROSS-REFERENCE TO STATUTEThe proposed amendments affect Chapter 1579, InsuranceCode, which establishes the Texas School Employees UniformGroup Health Coverage (TRS-ActiveCare), §1579.101 whichrequires the trustee to establish plans of group coverage foremployees participating in the program and their dependents;provide tiers of coverage; define the requirements of eachcoverage plan and tier of coverage; and provide comparablecoverage plans of each tier of coverage.§41.35. Coverage Plans.

(a) TRS-ActiveCare shall include at least two coverage plans,including a catastrophic care coverage plan and a primary care cover-age plan, in accordancewith Chapter 1579, Insurance Code. The cover-ages provided for eligible persons under the plans offered will include,but are not limited to, basic medical expense coverage and prescriptiondrug coverage, in accordance with terms, conditions, and limitationsadopted by resolution of the trustee.

(b) TRS-ActiveCare may also include additional plans forhealth-care coverage under terms, conditions and limitations adoptedby resolution of the trustee.

(c) The coverage plans offered under TRS-ActiveCare willeach include at least two of the following rating tiers:

(1) Employee only;

(2) Employee and spouse;

(3) Employee and children;

(4) Employee and family.

(d) TRS may not offer optional coverages, other than optionalpermanent life insurance, optional long-term care insurance, and op-tional disability insurance to employees participating in TRS-Active-


Care in accordance with terms, conditions and limitations adopted byresolution of the trustee.

(e) TRS may determine different rates and premiums applica-ble to different participating entities or potential participating entitiesunder the TRS-ActiveCare program based on certain risks, regionalfactors, and other underwriting considerations.



♦ ♦ ♦CHAPTER 43. CONTESTED CASES34 TAC §43.1, §43.45The Teacher Retirement System of Texas (TRS) proposesamendments to 34 TAC §43.1, relating to administrative reviewof individual requests and 34 TAC §43.45, relating to proposalsfor decision, exceptions, and appeals to the Board of Trustees.BACKGROUND AND PURPOSEChapter 43 addresses procedures for appeals of administrativedecisions and contested cases relating to the TRS pension plan.TRS proposes amendments to §43.1 and §43.45 to implementamendments to Government Code §825.521, by House Bill1585, enacted by the 87th Texas Legislature, which requiresTRS to modify the deadline for members or retirees to appeala decision or determination by TRS staff to afford the memberor retiree at least the same amount of time to file an appeal asTRS had to issue a decision in the appeal.The amendments to Government Code §825.521 require TRS tomake amendments to §43.1 and §43.5 to mirror the amendmentto 34 Texas Administrative Code §43.5 necessitated by HouseBill 2629 in 2019. House Bill 2629 created Section 825.521 andrequired the TRS Board of Trustees to adopt rules ensuring thatthe deadline for filing an appeal of a final administrative decisionafford a member or retiree at least the same amount of time asTRS took to issue the final administrative decision. As requiredby the amendments to Government Code §825.521 made byHouse Bill 1585, the amendments to §43.1 and §43.45 expandthe deadline structure from §43.5 to also apply to appeals of thedecision of a department director and appeals of a decision in acontested case hearing rendered by the executive director fol-lowing the issuance of a proposal for decision by an administra-tive law judge.In the amended §43.1(c), a member or retiree must file their ap-peal of a department manager's decision by the later of either45 days after the decision of a department manager is mailed orthe number of days after the date the decision of the departmentmanager is mailed equal to the number of days it took TRS to is-sue the decision of the department manager. Amended §43.1(d)provides that the number of days it took TRS to issue the deci-sion of the department manager is calculated from the date TRS

received a person's appeal to the date the decision of the de-partment manager is mailed.In amended §43.45(d), the member or retiree must file their ap-peal of the executive director's decision by the later of either20 days after the date the decision of the executive directoris served or the number of days after the date the decision ofthe executive director is served equal to the number of days ittook the executive director to render the decision. Amended§43.45(f) provides the method for calculating that the number ofdays it took the executive director to render a decision. Amended§43.45(e) is a structural, nonsubstantive change to the rule re-quired due to the changes to §43.45(d).FISCAL NOTEDon Green, TRS Chief Financial Officer, has determined thatfor each year of the first five years the proposed amended rulewill be in effect, there will be no foreseeable fiscal implicationsfor state or local governments as a result of administering theproposed amended rule.PUBLIC COST/BENEFITFor each year of the first five years the proposed amended ruleswill be in effect, Mr. Green also has determined that the publicbenefit anticipated as a result of adopting the amended rules willbe to conform the administrative appeals process with new statu-tory requirements. Mr. Green has also determined that there isno economic cost to entities or persons required to comply withthe proposed amended rules.ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX-IBILITY ANALYSISTRS has determined that there will be no adverse economic ef-fect on small businesses, micro-businesses, or rural communi-ties as a result of the proposed amendments. Therefore, neitheran economic impact statement nor a regulatory flexibility analy-sis is required under Government Code §2006.002.LOCAL EMPLOYMENT IMPACT STATEMENTTRS has determined that there will be no effect on local employ-ment because of the proposed amended rule. Therefore, no lo-cal employment impact statement is required under GovernmentCode §2001.022.GOVERNMENT GROWTH IMPACT STATEMENTTRS has determined that for the first five years the proposedamended rules will be in effect, the proposed amendments willnot create or eliminate any TRS programs; will not require thecreation or elimination of employee positions; will not require anincrease or decrease in future legislative appropriations to TRS;will not eliminate any fees currently paid to TRS; will not createa new regulation; will not expand, limit or repeal an existing reg-ulation; will not increase or decrease the number of individualssubject to the rule's applicability; and will not affect the state'seconomy.TAKINGS IMPACT ASSESSMENTTRS has determined that there are no private real property in-terests affected by the proposed amended rule, therefore, a tak-ings impact assessment is not required under Government Code§2007.043.COST TO REGULATED PERSONSTRS has determined that Government Code §2001.0045 doesnot apply to the proposed amended rules because the amended


rules do not impose a cost on regulated persons and theamended rules are necessary to implement legislation and thelegislature did not specifically state that §2001.0045 applies tothese rules.COMMENTSComments may be submitted in writing to Brian Guthrie, TRSExecutive Director, 1000 Red River Street, Austin, Texas 78701-2698. Written comments must be received by TRS no later than30 days after publication of this notice in the Texas Register.STATUTORY AUTHORITYThe proposed amended rules are proposed under the authorityof Government Code §825.102, which authorizes the Board toadopt rules for eligibility for membership, the administration ofthe funds of the retirement system, and the transaction of busi-ness of the Board; Government Code §825.115(b), which au-thorizes the Board to adopt rules relating to the authority of theBoard to make a final decision in a contested case or delegateits authority; and under Government Code §825.521, which pro-vides that in adopting rules relating to appeals of a determinationor decision of the retirement system by the system's staff, theboard of trustees shall ensure that rules establishing deadlinesfor the filing of an appeal afford a member or retiree at least thesame amount of time to file an appeal as the retirement systemhas to issue the retirement system's decision.CROSS-REFERENCE TO STATUTEThe proposed amended rules implement the following sectionsor chapters of the Government Code: §825.101, concerning thegeneral administration of the retirement system; §825.115, con-cerning the applicability of certain laws; and §825.521, concern-ing the deadline to appeal administrative decisions of the retire-ment system.§43.1. Administrative Review of Individual Requests.

(a) Organization. TRS is divided into administrative divisions,which are further divided into departments, for the efficient implemen-tation of its duties. Any person who desires any action from TRS mustconsult with the proper department within TRS and comply with allproper requirements for completing forms and providing informationto that department.

(b) Final administrative decision by chief benefit officer. Inthe event that a person is adversely affected by a determination, de-cision, or action of department personnel, the person may appeal thedetermination, decision, or action to the appropriate manager withinthe department, and then to the chief benefit officer of TRS. The chiefbenefit officer shall mail a final written administrative decision, whichshall include:

(1) the chief benefit officer's determination regarding theperson's appeal and reasons for denying the appeal, if applicable; and

(2) a statement that if the person is adversely affected bythe decision, the person may request an adjudicative hearing to appealthe decision and the deadline for doing so.

(c) An appeal to the chief benefit officer as described by sub-section (b) of this section must be submitted by the later of:

(1) 45 days after the date the decision of the departmentmanager is mailed; or

(2) the number of days after the date the decision of thedepartment manager is mailed equal to the number of days it took TRSto issue the decision of the department manager.

(d) The number of days it took TRS to issue the decision ofthe department manager is calculated from the date TRS received theperson's appeal of the determination, decision, or action of departmentpersonnel to the date TRS mailed the decision of the department man-ager.

(e) [(c)] A person adversely affected by a decision of the chiefbenefit officer may request an adjudicative hearing to appeal the de-cision of the chief benefit officer as provided in §43.5 of this chapter(relating to Request for Adjudicative Hearing). The deputy directorshall determine whether the appeal should be docketed and set for acontested case hearing pursuant to §43.9 of this chapter (relating toDocketing of Appeal for Adjudicative Hearing and Dismissal for Fail-ure to Obtain Setting).

(f) [(d)] Final administrative decision by Medical Board. Inthe event that theMedical Board does not certify disability of a memberunder Government Code, §824.303(b), or the Medical Board certifiesthat a disability retiree is no longer mentally or physically incapacitatedfor the performance of duty under Government Code, §824.307(a), themember or retiree may request reconsideration and submit additionalinformation to the Medical Board. The Medical Board shall considera request for reconsideration and additional information and make adetermination on the disability of the member or retiree. If a requestfor reconsideration has been denied, amember or retireemay appeal thedecision by requesting an adjudicative hearing as provided in §43.5 ofthis chapter (relating to Request for Adjudicative Hearing). The deputydirector shall determine whether the appeal should be docketed and setfor a contested case hearing pursuant to §43.9 of this chapter (relatingto Docketing of Appeal for Adjudicative Hearing and Dismissal forFailure to Obtain Setting).

(g) [(e)] Applicability. The procedures of this chapter applyonly to administrative decisions, appeals, and adjudicative hearings re-lating to the TRS pension plan, unless rules relating to other programsspecifically adopt by reference the provisions of this chapter.

§43.45. Proposals for Decision, Exceptions, and Appeals to theBoard of Trustees.

(a) The administrative law judge shall issue a proposal for de-cision with proposed conclusions of law and findings of fact in accor-dance with Government Code, Chapter 2001 and other applicable law.

(b) Exceptions to the proposal for decision shall be filed withTRS, directed to the attention of the executive director, within 15 daysof the date the proposal for decision was issued. Replies to any excep-tion shall be filed with TRS within 15 days of the date the exception isfiled. Exceptions shall state with specificity any error of fact or law al-leged to have been made by the administrative law judge, and specificreferences shall be given to exhibit numbers and pages and to testimonywhere supporting evidence is found. References to testimony shall in-clude the witness name and transcript page and line, if a transcript wasprepared; if no transcript was prepared, testimony shall be identified atleast by witness name, as well as any other means that may assist inverifying assertions regarding the testimony.

(c) The executive director shall render a decision in the pro-ceeding, except that in a proceeding relating to eligibility for disabilityretirement, the board of trustees shall render a decision following is-suance of a proposal for decision. The executive director or the boardof trustees may accept or modify the proposed conclusions of law orproposed findings of fact or may vacate or modify an order issued byan administrative law judge in the manner set forth in subsection (f) ofthis section. If changes are made, the decision shall state in writing thespecific reason and legal basis for each change. A copy of the decisionshall be served on the parties.


(d) Any party adversely affected by a decision of the executivedirector in a docketed appeal may appeal the decision to the board oftrustees, unless by statute or other rule the decision of the executivedirector is the final decision of TRS. Written notice of appeal must befiled with the executive director by the [no] later of: [than]

(1) 20 days after the decision of the executive director ismailed; or [served.]

(2) the number of days after the date the decision of theexecutive director is mailed equal to the number of days it took theexecutive director to render the decision in the proceeding.

(e) If notice of appeal is timely filed, the decision of the exec-utive director shall serve as a proposal for decision to the board.

(f) The number of days it took the executive director to renderthe decision in a proceeding is calculated from:

(1) if exceptions to a proposal for decision are not filed, thedate of the deadline to file exceptions to a proposal for decision in theproceeding under subsection (b) of this section to the date the decisionof the executive director is mailed; or,

(2) if exceptions to a proposal for decision are filed, thedate the administrative law judge takes action on the filed exceptionsto the date the decision of the executive director is mailed.

(g) [(e)] If a decision of the executive director is appealed, theparties may file additional exceptions or briefs and replies if the execu-tive director modified the administrative law judge's proposed findingsof fact or conclusions of law. Additional exceptions or briefs must befiled and served at the same time as the notice of appeal. Replies shallbe filed and served within 15 days of the filing of the notice of appealand exceptions or briefs. The executive director may modify the filingdeadlines.

(h) [(f)] The final decision in an appeal shall be based upon theexisting record in the case. In its sole discretion, the board of trusteesor the executive director, as applicable, may take the following actions:

(1) modify, refuse to accept, or delete any proposed findingof fact or conclusion of law made by the administrative law judge;

(2) make alternative findings of fact and conclusions oflaw;

(3) vacate or modify an order issued by the administrativelaw judge; and

(4) make a final decision on a contested case.

(i) [(g)] In exercising its discretion, the board of trustees or theexecutive director, as applicable, may consider but is not limited to thefollowing grounds for changing a finding of fact or conclusion of lawor for making a final decision in a contested case that is contrary to therecommendation of the administrative law judge:

(1) the administrative law judge did not properly apply orinterpret applicable law, retirement system rules, written policies pro-vided to the administrative law judge, or prior administrative decisions;

(2) a prior administrative decision on which the adminis-trative law judge relied is incorrect or should be changed;

(3) a technical error in a finding of fact should be changed;

(4) a finding or conclusion or other action of the adminis-trative law judge would alter the terms of the plan; or

(5) the change is pursuant to a fiduciary responsibility.

(j) [(h)] An administrative decision of TRS staff, a decision bythe Medical Board, or a decision by the executive director is the final

decision of TRS unless a party exhausts any right to appeal a matter tothe board of trustees.

(k) [(i)] An appeal to the Board of Trustees shall be consideredin open meeting to the extent required by law. A party who appeals tothe Board of Trustees consents to the public discussion of all relevantfacts, including information in the member's file that may otherwisebe confidential by law. The board in its sole discretion may determinewhether to hear oral argument on an appeal. In making that determi-nation, the board may consider if confidential information of a TRSparticipant who is not a party to the appeal may be disclosed duringoral argument.



♦ ♦ ♦TITLE 37. PUBLIC SAFETY AND CORREC-TIONS

PART 13. TEXAS COMMISSION ONFIRE PROTECTIONCHAPTER 421. STANDARDS FORCERTIFICATION37 TAC §421.1The Texas Commission on Fire Protection (commission) pro-poses amendments to 37 Texas Administrative Code Chapter421, Standards For Certification, concerning §421.1 Proceduresfor Meetings.BACKGROUND AND PURPOSEThe purpose of the proposed amendments to rule §421.1 isto provide information regarding the appointment of advisorycommittees and ad hoc committees by the commission andprocedures for meetings. These amendments will also imple-ment Senate Bill 709, 87th Regular Legislative Session, whichamended Texas Government Code §419.008(f), regarding ad-visory committees, and implement one of the agency's Sunsetreview recommendations.FISCAL NOTE IMPACT ON STATE AND LOCAL GOVERN-MENTMichael Wisko, Executive Director, has determined that for eachyear of the first five-year period the proposed amendments arein effect, there will be no significant fiscal impact to state govern-ment or local governments as a result of enforcing or adminis-tering these amendments as proposed under Texas GovernmentCode §2001.024(a)(4).PUBLIC BENEFIT AND COST NOTEMr. Wisko has also determined under Texas GovernmentCode §2001.024(a)(5) that for each year of the first five years


the amendments are in effect the public benefit will be moreaccurate, clear, and concise rules regarding the appointment ofany advisory committee or ad hoc committee appointed by thecommission.LOCAL ECONOMY IMPACT STATEMENTThere is no anticipated effect on the local economy for the firstfive years that the proposed amended section is in effect; there-fore, no local employment impact statement is required underTexas Government Code §2001.022 and 2001.024(a)(6).ECONOMIC IMPACTONSMALL BUSINESSES, MICRO-BUSI-NESSES AND RURAL COMMUNITIESMr. Wisko has determined there will be no impact on rural com-munities, small businesses, or micro-businesses as a result ofimplementing these amendments. Therefore, no economic im-pact statement or regulatory flexibility analysis, as provided byTexas Government Code §2006.002, is required.GOVERNMENT GROWTH IMPACT STATEMENTThe agency has determined under Texas Government Code§2006.0221 that during the first five years the amendments arein effect:(1) the rules will not create or eliminate a government program;(2) the rules will not create or eliminate any existing employeepositions;(3) the rules will not require an increase or decrease in futurelegislative appropriation;(4) the rules will not result in a decrease in fees paid to theagency;(5) the rules will not create a new regulation;(6) the rules will not expand a regulation;(7) the rules will not increase the number of individuals subjectto the rule; and(8) the rules are not anticipated to have an adverse impact onthe state's economy.TAKINGS IMPACT ASSESSMENTThe commission has determined that no private real propertyinterests are affected by this proposal and this proposal doesnot restrict, limit, or impose a burden on an owner's rights tohis or her private real property that would otherwise exist in theabsence of government action. As a result, this proposal doesnot constitute a taking or require a takings impact assessmentunder Texas Government Code §2007.043.COSTS TO REGULATED PERSONSThe proposed amendments do not impose a cost on regulatedpersons, including another state agency, a special district, or alocal government and, therefore, is not subject to Texas Govern-ment Code §2001.0045.ENVIRONMENTAL IMPACT STATEMENTThe commission has determined that the proposed amend-ments do not require an environmental impact analysis becausethe amendments are not major environmental rules under TexasGovernment Code §2001.0225.REQUEST FOR PUBLIC COMMENT

Comments regarding the proposed amendments may be sub-mitted, in writing, within 30 days following the publication of thisnotice in the Texas Register, to Michael Wisko, Executive Direc-tor, Texas Commission on Fire Protection, P.O. Box 2286, Austin,Texas 78768 or e-mailed to [email protected] AUTHORITYThe amended rule is proposed under Texas Government Code,§419.008(f), which authorizes the commission to appoint advi-sory committees to assist it in the performance of its duties.CROSS REFERENCE TO STATUTENo other statutes, articles, or codes are affected by theseamendments.§421.1. Procedures for Meetings.

(a) The Commission may maintain advisory committees andad hoc committees to assist with rulemaking, curriculum development,and the performance of the Commission's duties. These committeenames, make up, term limits, roles and meeting requirements will beoutlined within this rule. These committees shall exist for no morethan five (5) years and shall be reviewed and evaluated for continuancebefore the end of the fifth year.

(b) [(a)] Time and place. The committees [Fire Fighter Ad-visory Committee and the Curriculum and Testing Committee] shallmeet at such time and place in the State of Texas as they deem proper.[The Fire Fighter Advisory Committee shall meet at least twice eachcalendar year.]

(c) [(b)] Meeting called. Meetings shall be called by the chair-man, by the Commission, or upon the written request of a quorum of[five] members.

(d) [(c)] Quorum. A majority of members shall constitute aquorum.

(e) [(d)] Members. Committee members serve at the will ofthe Commission and may serve six-year staggered terms but may notserve more than two (2) consecutive terms. [The Fire Fighter AdvisoryCommittee shall consist of nine members appointed by the Commis-sion. The Curriculum and Testing Committee shall consist of membersappointed by the Commission upon the recommendation of the FireFighter Advisory Committee. Committee members serve at the will ofthe Commission.]

(f) [(e)] Officers. Committee Officers [of the Fire Fighter Ad-visory Committee and the Curriculum and Testing Committee] shallconsist of a chairman[,] and vice-chairman appointed by the Commis-sion. [, and secretary. Each committee shall elect its officers from theappointed members at its first meeting and thereafter at its first meetingfollowing January 1 of each year or upon the vacancy of an office.]

(g) [(f)] Responsibility. Committee responsibilities shall beestablished by the Commission. [The Fire Fighter Advisory Commit-tee shall review Commission rules relating to fire protection personneland fire departments and recommend changes in the rules to the Com-mission.]

(h) [(g)] Effective Date. All committees will have designatedeffective dates not to exceed five years without review and reestablish-ment by the Commission. [Rules shall become effective no sooner than20 days after filing with the Texas Register for final adoption. The com-mittee or Commission may recommend a later effective date.]

(i) [(h)] Removal. It is a ground for removal from an advisorycommittee appointed by the Commission if a member is absent frommore than half of the regularly scheduled committee meetings that the


member is eligible to attend during a calendar year unless the absenceis excused by a majority vote of the committee.

(j) Effective in 2021, the Commission established three (3) ad-visory committees, the Curriculum and Testing, Firefighter Advisory,and Health and Wellness. These committees will expire in 2026 unlessreviewed and reestablished by the Commission. The Commission hasestablished two (2) ad hoc committees, 427 and 435, which will existfor the period of time needed, not to exceed two years.


Filed with the Office of the Secretary of State on July 28, 2021.TRD-202102902Michael WiskoExecutive DirectorTexas Commission on Fire ProtectionEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 936-3812

♦ ♦ ♦CHAPTER 441. CONTINUING EDUCATION37 TAC §441.5The Texas Commission on Fire Protection (commission) pro-poses amendments to 37 Texas Administrative Code Chapter441, Continuing Education, concerning §441.5 Requirements.BACKGROUND AND PURPOSEThe purpose of the proposed amendments to rule §441.5 is toadd a requirement to review the most recent copy of the injuryreport as part of the continuing education requirements for re-newal of fire protection personnel certifications. The intent of thisrequirement is to draw attention to the top injuries to fire protec-tion personnel contained in the report to prevent future injuries.FISCAL NOTE IMPACT ON STATE AND LOCAL GOVERN-MENTMichael Wisko, Executive Director, has determined that for eachyear of the first five-year period the proposed amendments arein effect, there will be no significant fiscal impact to state govern-ment or local governments as a result of enforcing or adminis-tering these amendments as proposed under Texas GovernmentCode §2001.024(a)(4).PUBLIC BENEFIT AND COST NOTEMr. Wisko has also determined under Texas Government Code§2001.024(a)(5) that for each year of the first five years theamendments are in effect the public benefit will be the result infewer fire fighter injuries and fatalities across the state resultingin savings to the cities.LOCAL ECONOMY IMPACT STATEMENTThere is no anticipated effect on the local economy for the firstfive years that the proposed amendments are in effect; therefore,no local employment impact statement is required under TexasGovernment Code §2001.022 and 2001.024(a)(6).ECONOMIC IMPACTONSMALL BUSINESSES, MICRO-BUSI-NESSES AND RURAL COMMUNITIESMr. Wisko has determined there will be no impact on rural com-munities, small businesses, or micro-businesses as a result of

implementing these amendments. Therefore, no economic im-pact statement or regulatory flexibility analysis, as provided byTexas Government Code §2006.002, is required.GOVERNMENT GROWTH IMPACT STATEMENTThe agency has determined under Texas Government Code§2006.0221 that during the first five years the amendments arein effect:(1) the rules will not create or eliminate a government program;(2) the rules will not create or eliminate any existing employeepositions;(3) the rules will not require an increase or decrease in futurelegislative appropriation;(4) the rules will not result in a decrease in fees paid to theagency;(5) the rules will not create a new regulation;(6) the rules will not expand a regulation;(7) the rules will not increase the number of individuals subjectto the rule; and(8) the rules are not anticipated to have an adverse impact onthe state's economy.TAKINGS IMPACT ASSESSMENTThe commission has determined that no private real propertyinterests are affected by this proposal and this proposal doesnot restrict, limit, or impose a burden on an owner's rights tohis or her private real property that would otherwise exist in theabsence of government action. As a result, this proposal doesnot constitute a taking or require a takings impact assessmentunder Texas Government Code §2007.043.COSTS TO REGULATED PERSONSThe proposed amendments do not impose a cost on regulatedpersons, including another state agency, a special district, or alocal government and, therefore, is not subject to Texas Govern-ment Code §2001.0045.ENVIRONMENTAL IMPACT STATEMENTThe commission has determined that the proposed amend-ments do not require an environmental impact analysis becausethe amendments are not major environmental rules under TexasGovernment Code §2001.0225.REQUEST FOR PUBLIC COMMENTComments regarding the proposed amendments may be sub-mitted, in writing, within 30 days following the publication of thisnotice in the Texas Register, to Michael Wisko, Executive Direc-tor, Texas Commission on Fire Protection, P.O. Box 2286, Austin,Texas 78768 or e-mailed to [email protected] AUTHORITYThe amended rule is proposed under Texas Government Code,§419.008, which authorizes the commission to adopt or amendrules to perform the duties assigned to the commission. Therule is also proposed under Texas Government Code §419.034,which authorizes the commission to adopt rules establishing therequirements for certification renewal.CROSS REFERENCE TO STATUTE


No other statutes, articles, or codes are affected by theseamendments.§441.5. Requirements.

(a) Continuing education shall be required in order to renewcertification.

(b) The continuing education requirement for renewal shallconsist of a minimum of 18 hours of training to be conducted duringthe certification period. Of the 18 hours, two hours shall be a review ofthe most recent TCFP injury report, with a focus on the top three lead-ing causes of injuries during the reporting period. All documentationof training used to satisfy the continuing education requirements mustbe maintained for a period of three years from the date of the training.Continuing education records shall be maintained by the departmentin accordance with the Texas State Library and Archives Commission,State and Local Records Management Division, Records Schedule, orLocal Schedule (GR 1050-28), whichever is greater.

(c) Level 1 training must be conducted by a certified instruc-tor. Interactive computer-based continuing education training that issupervised and verified by a certified instructor is acceptable.

(d) The continuing education program of a regulated entitymust be administered and maintained in accordance with commissionrule by a certified instructor.

(e) No more than four hours per year in any one subject ofLevel 1 training may be counted toward the continuing education re-quirement for a particular certification.

(f) There shall be no "hour per subject limit" placed on Level2 courses, except that emergency medical courses shall be limited tofour hours per year.

(g) The head of a fire department may select subject matter forcontinuing education appropriate for a particular discipline.

(h) The head of a fire department must certify whether or notthe individuals whose certificates are being renewed have compliedwith the continuing education requirements of this chapter on the cer-tification renewal document. Unless exempted from the continuing ed-ucation requirements, an individual who fails to comply with the con-tinuing education requirements in this chapter shall be notified by thecommission of the failure to comply.

(i) After notification from the commission of a failure to com-ply with continuing education requirements, an individual who holdsa certificate is prohibited from performing any duties authorized by arequired certificate until such time as the deficiency has been resolvedand written documentation is furnished by the department head for ap-proval by the commission. Continuing education hours obtained toresolve a deficiency may not be applied to the continuing education re-quirements for the current certification period.

(j) Any person who is a member of a paid or volunteer firedepartment who is on extended leave for a cumulative period of sixmonths or longer due to a documented illness, injury, or activation tomilitary service may be exempted from the continuing education re-quirement for the applicable renewal period(s). Such exemptions shallbe reported by the head of the department to the commission at renewaltime, and a copy kept with the department continuing education recordsfor three years.

(k) Any individual who is not a member of a paid or volunteerfire department who is unable to perform work, substantially similar innature as would be performed by fire protection personnel appointedto that discipline, may be exempted from the continuing education re-quirement for the applicable renewal period(s). Commission staff shalldetermine the exemption using documentation provided by the individ-

ual and the individual's treating physician of the illness or injury thatcumulatively lasts six months or longer, or by documentation of mili-tary service or activation to military service.

(l) In order to renew certification for any discipline which hasa continuing education requirement stated in this chapter, an individualholder of a certificate not employed by a regulated entity must complywith the continuing education requirements for that discipline. Only20 total hours of continuing education for each certification period inLevel 1 or Level 2 subjects relating to the certification being renewedshall be required to renew all certificates the individual holds, exceptas provided in §441.17 of this title (relating to Continuing Educationfor Hazardous Materials Technician).

(m) An individual certificate holder, not employed by a regu-lated entity, shall submit documentation of continuing education train-ing upon notification by the commission. An example of documenta-tion of continuing education training may include, but not be limited to,a Certificate of Completion, a college or training facility transcript, afire department training roster, etc. Commission staff will review andmay approve or disapprove such documentation of training in accor-dance with applicable commission rules and/or procedures. The train-ing for a resident of Texas at the time the continuing education trainingis conducted shall be administered by a commission instructor, com-mission certified training facility, an accredited institution of highereducation, or a military or nationally recognized provider of training.The training for a nonresident of Texas[,] shall be delivered by a statefire academy, a fire department training facility, an accredited institu-tion of higher education, or a military or nationally recognized providerof training. The individual must submit training documentation to thecommission for evaluation of the equivalency of the training requiredby this chapter. The individual certificate holder is responsible formaintaining all of his or her [his/her] training records for a period ofthree years from the date of the training.

(n) If an individual has completed a commission approvedacademy in the 12 months prior to his or her certification expirationdate, a copy of that certificate of completion will be acceptabledocumentation of continuing education for that certification renewalperiod.


Filed with the Office of the Secretary of State on July 28, 2021.TRD-202102903Michael WiskoExecutive DirectorTexas Commission on Fire ProtectionEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 936-3812

♦ ♦ ♦TITLE 43. TRANSPORTATION

PART 1. TEXAS DEPARTMENT OFTRANSPORTATIONCHAPTER 9. CONTRACT AND GRANTMANAGEMENTSUBCHAPTER A. GENERAL43 TAC §9.8


The Texas Department of Transportation (department) proposesamendments to 43 TAC §9.8, concerning Enhanced Contractand Performance Monitoring.EXPLANATION OF PROPOSED AMENDMENTSSection 9.8, Enhanced Contract and Performance Monitoring,requires the department to monitor and report to the TexasTransportation Commission (commission), on a quarterly basis,the performance and status of each contract, other than alow-bid construction and maintenance contract, that is valued at$5 million or more or that the department determines constitutesa high-risk to the department. The department has determinedthat due to the high volume of department contracts that arevalued at $5 million or more, the dollar threshold that identifiescontracts that must be monitored and reported to the commis-sion should be increased to an amount that will meaningfullycapture the department's highest dollar contracts. Accordingly,amended §9.8, Enhanced Contract and Performance Monitor-ing, is revised to increase the dollar threshold that identifiescontracts that must be reported to the Commission from $5million to $50 million. The department will continue to monitorand report on contracts with a lesser value that it determinesconstitute high-risks to the department.FISCAL NOTEStephen Stewart, Chief Financial Officer, has determined, in ac-cordance with Government Code, §2001.024(a)(4), that as a re-sult of enforcing or administering the rules for each of the firstfive years in which the proposed rules are in effect, there will beno fiscal implications for state or local governments as a resultof enforcing or administering the rules.LOCAL EMPLOYMENT IMPACT STATEMENTMr. Kenneth Stewart, Director of Contract Services Division,has determined that there will be no significant impact on lo-cal economies or overall employment as a result of enforcing oradministering the proposed rules and therefore, a local employ-ment impact statement is not required under Government Code,§2001.022.PUBLIC BENEFITMr. Stewart has also determined, as required by GovernmentCode, §2001.024(a)(5), that for each year of the first five yearsin which the proposed rules are in effect, the public benefit an-ticipated as a result of enforcing or administering the rules willbe improvements to the department's management of contractsthrough the identification and mitigation of risk. There are no an-ticipated economic costs for persons required to comply with theproposed rules.COSTS ON REGULATED PERSONSMr. Stewart has also determined, as required by GovernmentCode, §2001.024(a)(5), that for each year of that period thereare no anticipated economic costs for persons, including a stateagency, special district, or local government, required to com-ply with the proposed rules and therefore, Government Code,§2001.0045, does not apply to this rulemaking.ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX-IBILITY ANALYSISThere will be no adverse economic effect on small businesses,micro-businesses, or rural communities, as defined by Govern-ment 3 Code, §2006.001, and therefore, an economic impact

statement and regulatory flexibility analysis are not required un-der Government Code, §2006.002.GOVERNMENT GROWTH IMPACT STATEMENTMr. Stewart has considered the requirements of GovernmentCode, §2001.0221 and anticipates that the proposed rules willhave no effect on government growth. He expects that duringthe first five years that the rule would be in effect:(1) it would not create or eliminate a government program;(2) its implementation would not require the creation of new em-ployee positions or the elimination of existing employee posi-tions;(3) its implementation would not require an increase or decreasein future legislative appropriations to the agency;(4) it would not require an increase or decrease in fees paid tothe agency;(5) it would not create a new regulation;(6) it would not expand, limit, or repeal an existing regulation;(7) it would not increase or decrease the number of individualssubject to its applicability; and(8) it would not positively or adversely affect this state's economy.TAKINGS IMPACT ASSESSMENTMr. Stewart has determined that a written takings impact assess-ment is not required under Government Code, §2007.043.SUBMITTAL OF COMMENTSWritten comments on the amendments to §9.8 may be submit-ted to Rule Comments, General Counsel Division, Texas De-partment of Transportation, 125 East 11th Street, Austin, Texas78701-2483 or to [email protected] with the subjectline "Contract Risk Reporting." The deadline for receipt of com-ments is 5:00 p.m. on September 13, 2021. In accordancewith Transportation Code, §201.811(a)(5), a person who submitscomments must disclose, in writing with the comments, whetherthe person does business with the department, may benefit mon-etarily from the proposed amendments, or is an employee of thedepartment.STATUTORY AUTHORITYThe rule is proposed under Transportation Code, §201.101,which provides the commission with the authority to establishrules for the conduct of the work of the department, and morespecifically, Government Code, §2261.253, which requires astate agency to adopt rules to establish a procedure to identifyeach contract requiring enhanced contract or performance mon-itoring and submit information on the contract to its governingbody.CROSS REFERENCE TO STATUTES IMPLEMENTED BYTHIS RULEMAKINGGovernment Code, §2261.253.§9.8. Enhanced Contract and Performance Monitoring.

(a) The department shall monitor and report to the TexasTransportation Commission, on a quarterly basis, the performanceand status of each contract, other than a low-bid construction andmaintenance contract, that is valued at $50 [$5] million or more or thatthe department determines constitutes a high-risk to the department.


(b) The department immediately shall notify the commissionof any serious issue or risk that is identified in a contract and that hasnot been reported in a quarterly report provided under subsection (a) ofthis section.

(c) This section does not apply to a memorandum of under-standing, interagency contract, interlocal agreement, or contract forwhich there is not a cost.


Filed with the Office of the Secretary of State on July 29, 2021.TRD-202102927Becky BlewettDeputy General CounselTexas Department of TransportationEarliest possible date of adoption: September 12, 2021For further information, please call: (512) 463-8630

♦ ♦ ♦SUBCHAPTER C. CONTRACTING FORARCHITECTURAL, ENGINEERING, ANDSURVEYING SERVICESThe Texas Department of Transportation (department) proposesthe amendments to §§9.31 - 9.35 and §§9.38 - 9.41 and the re-peal of §9.36 and §9.37, relating to Contracting for Architectural,Engineering, and Surveying Services.EXPLANATION OF PROPOSED AMENDMENTS AND RE-PEALThis rulemaking streamlines the selection process for architec-tural, engineering, and surveying service contracts in severalways, including by eliminating the Request for Qualifications(RFQ) and using only the Request for Proposals (RFP) as thesolicitation method for professional services contracts. Theresponse requiring a Statement of Qualifications (SOQ) iseliminated, with the Proposal being the only response formatused by the department. This change will align the non-federalselection process, which is sometimes referred to as the stateprocess, with the federal selection process and will reduce therisk of confusion by utilizing only one process for procurements.Under the federal requirements in 23 United States Code ofFederal Regulations (CFR) 172, the RFQ is optional; however,the RFP is required.Amendments allow a non-federal indefinite deliverable contractto be extended beyond five years and increase the period toissue work to four years instead of three. These changes provideflexibility by allowing the department to keep the design providerunder contract to provide construction phase services.Amendments to §9.31, Definitions, remove or amend definitionsto align with the elimination of the SOQ and RFQ and otheramendments. The definitions are amended to remove the terms"statements of qualifications" or "qualification" and replace with"proposal" or "proposals." The definitions for RFQ and SOQ areremoved because the department is streamlining the processand is no longer using the RFQ and SOQ process. The defini-tion for "Request for Proposal (RFP)" is clarified to identify theRFP as the advertisement for an architectural, engineering, orsurveying contract. This amendment will streamline the selec-

tion processes. The definition of "solicitation" is removed sincethe RFP is the only advertisement format.Amendments to §9.32, Selection Processes, Contract Types,Selection Types, and Projected Contracts, to streamline the se-lection processes and align the non-federal selection processwith the federal selection process. Section 9.32(a) is amendedto add the non-federal (state) process as a selection process anddelete the comprehensive, streamlined, and accelerated selec-tion processes. Both the non-federal and federal processes willhave options for selection to be made with or without interviews.Section 9.32 is also amended to replace the term "solicitation"with "RFP" to align with a single advertisement format. Sub-section (b)(1)(B) is amended to change the three-year limit onissuing work authorizations to four years after the date of con-tract execution. This provides flexibility by allowing the depart-ment to continue to issue work authorizations for projects thatcan be completed before the termination date in the contract.Subsection (b)(1)(C) adds text to maintain the limit on contractsprocured using the federal selection process to a contract pe-riod of no more than five years. This addition is consistent withfederal guidelines for contracts procured with the federal selec-tion process and adds flexibility to contracts procured using thenon-federal process. By allowing indefinite deliverable contractsprocured using a non-federal selection process to be extendedbeyond five years, the department may be able to keep the de-sign provider under contract to provide construction phase ser-vices.Amendments to §9.33, Precertification, replace the term "solici-tation" with "RFP" to align with a single advertisement format.Amendments to §9.34, Comprehensive Process, rename thecomprehensive process to the non-federal (state) process andalign the section with the federal selection process. The amend-ments streamline the selection processes. Section 9.34 is alsoamended to replace the term "solicitation" with "RFP" to alignwith a single advertisement format. Subsection (a) is amendedto delete the reference to specific deliverable contracts $1 millionor more in value and allows the non-federal (state) process to beused for any contract that is not subject to the federal process.This deletion will align the non-federal selection process with thefederal selection process. Subsection (b)(8)(B) is amended toadd Group 17, Facilities Engineering, to the work groups that areexempted from administrative qualifications. This change alignsthis type of work with the architectural exemption for contractsprocured using the non-federal process.Subsections (d), (e), (g), and (h) are amended to replace theRequest for Qualifications (RFQ) and the Statement of Qualifi-cations (SOQ) with the Request for Proposals (RFP) and pro-posal, respectively. These changes will streamline the selectionprocess since the department is no longer using the RFQ andSOQ process. Subsection (g)(3) is amended to add a state-ment to include the prime provider's past performance scoresin the evaluation of the responsive proposals. This amendmentstreamlines the process by incorporating the provider's past per-formance score early in the selection process.Subsection (i) is amended to clarify that the department will de-termine whether interviews are required in the non-federal selec-tion process. This amendment aligns the non-federal processwith the federal process. New subsection (i)(1) adds the re-quirement for an interview for specific deliverable contracts of$5 million or more in value or any indefinite deliverable contractfor higher-risk services based on complexity, anticipated projectcosts, number of contracts, or type of services. This amendment


aligns the non-federal process with the federal process and in-creases the dollar value threshold for interviews on specific deliv-erable contracts to streamline the interview process. Subsection(i)(3) is amended to delete the use of the prime provider's pastperformance scores during the interview stage of the non-fed-eral selection process. This amendment aligns this subsectionwith subsection (g)(3).Subsection (j)(1) is amended to clarify the basis for final selectiondependent on whether an interview is required. These additionsalign the non-federal process with the federal process. Subsec-tion (j)(2) is amended to clarify that the process for breaking tieswill be using scores from either the interview or the proposal, ifno interviews are required. This clarification aligns the non-fed-eral with the federal process. The title of the section is changedto "Non-federal Process."Amendments to §9.35, Federal Process, delete references to the"comprehensive" process and replace them with the "non-fed-eral" process. Each paragraph is amended to reference backto the applicable paragraph in §9.34 to align the federal andnon-federal selection processes. Section 9.35 is also amendedto replace the term "solicitation" with "RFP" to align with a sin-gle advertisement format. The text in subsections (d), (e), and(g) is deleted and a reference to §9.34(d), §9.34(e), §9.34(h)-(j),respectively, is added. Subsections (f) and (h) are deleted. Theamendments to §9.35 align the federal selection process and thenon-federal selection process, but do not alter the federal selec-tion process.Sections 9.36 and 9.37 are repealed. The three non-federalprocesses (comprehensive, streamlined, and accelerated) havebeen replaced with a single non-federal selection process in§9.34, which has an option for including interviews. Theseamendments streamline the non-federal process and align itwith the federal process.Amendments to §9.38, Emergency Contract Process, and §9.39,Urgent and Critical Process, change the reference to the head-ing of §9.34 in accordance with the amendment of that headingmade in this rulemaking.Amendments to §9.40, Negotiations, replace the term "solicita-tion" with "RFP" to align with a single advertisement format andthe references to the comprehensive, streamlined, or acceler-ated processes are replaced with references to the non-federalprocess to align with changes made to §9.34.Amendments to §9.41, Contract Administration, make changesto provisions relating to performance evaluations. Amendmentsto subsection (d)(1) allow the evaluation of a provider employeewho is involved with managing a work authorization and replacethe text that requires a performance evaluation of the providerproject manager and firm during the contract activity with a re-quirement for evaluations to be conducted at least once every 12months. These amendments allow a department project man-ager to evaluate both the prime provider's project manager anda member of the prime provider's staff assigned to represent theprime provider on a work authorization, providing more flexibil-ity to the department project manager to give feedback to theprovider, and provide clarity to the department project managerfor completing an annual evaluation for the provider.FISCAL NOTEStephen Stewart, Chief Financial Officer, has determined, in ac-cordance with Government Code, §2001.024(a)(4), that as a re-sult of enforcing or administering the rules for each of the first

five years in which the proposed rules are in effect, there will beno fiscal implications for state or local governments as a resultof enforcing or administering the rules.LOCAL EMPLOYMENT IMPACT STATEMENTMartin L. Rodin, P.E., Professional Engineering ProcurementServices Division Director, has determined that there will be nosignificant impact on local economies or overall employment asa result of enforcing or administering the proposed rules, and,therefore, a local employment impact statement is not requiredunder Government Code, §2001.022.PUBLIC BENEFITMr. Rodin has determined, as required by Government Code,§2001.024(a)(5), that for each year of the first five years in whichthe proposed rules are in effect, the public benefit anticipatedas a result of enforcing or administering the rules will be astreamlined selection processes for contracts for architectural,engineering, and surveying services, increased flexibility inusing indefinite deliverable contracts, and clarification of theprime provider performance evaluation process.COSTS ON REGULATED PERSONSMr. Rodin has also determined, as required by GovernmentCode, §2001.024(a)(5), that for each year of that period thereare no anticipated economic costs for persons, including a stateagency, special district, or local government, required to com-ply with the proposed rules, and, therefore, Government Code,§2001.0045, does not apply to this rulemaking.ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX-IBILITY ANALYSISThere will be no adverse economic effect on small businesses,micro-businesses, or rural communities, as defined by Govern-ment Code, §2006.001, and, therefore, an economic impactstatement and regulatory flexibility analysis are not requiredunder Government Code, §2006.002.GOVERNMENT GROWTH IMPACT STATEMENTMr. Rodin has considered the requirements of GovernmentCode, §2001.0221 and anticipates that the proposed rules willhave no effect on government growth. He expects that duringthe first five years that the rule would be in effect:(1) it would not create or eliminate a government program;(2) its implementation would not require the creation of new em-ployee positions or the elimination of existing employee posi-tions;(3) its implementation would not require an increase or decreasein future legislative appropriations to the agency;(4) it would not require an increase or decrease in fees paid tothe agency;(5) it would not create a new regulation;(6) it would not expand, limit, or repeal an existing regulation;(7) it would not increase or decrease the number of individualssubject to its applicability; and(8) it would not positively or adversely affect this state's economy.TAKINGS IMPACT ASSESSMENTMr. Rodin has determined that a written takings impact assess-ment is not required under Government Code, §2007.043.


SUBMITTAL OF COMMENTSWritten comments on the proposed amendments to §§9.31 -9.35 and §§9.38 - 9.41 and the repeal of §9.36 and §9.37 maybe submitted to Rule Comments, General Counsel Division,Texas Department of Transportation, 125 East 11th Street,Austin, Texas 78701-2483 or to [email protected] withthe subject line "PEPS Rules." The deadline for receipt of com-ments is 5:00 p.m. on September 13, 2021. In accordance withTransportation Code, §201.811(a)(5), a person who submitscomments must disclose, in writing with the comments, whetherthe person does business with the department, may benefitmonetarily from the proposed amendments, or is an employeeof the department.

43 TAC §§9.31 - 9.35, 9.38 - 9.41STATUTORY AUTHORITYThe amendments are proposed under Transportation Code,§201.101, which provides the Texas Transportation Commission(commission) with the authority to establish rules for the conductof the work of the department.CROSS REFERENCE TO STATUTES IMPLEMENTED BYTHIS RULEMAKINGGovernment Code, Chapter 2254, Subchapter A (ProfessionalServices Procurement Act) and Transportation Code, §223.041.§9.31. Definitions.

The following words and terms, when used in this subchapter, have thefollowing meanings, unless the context clearly indicates otherwise.

(1) Consultant Certification Information System(CCIS)--A computer system used to collect and store informationrelated to the department's certification of providers.

(2) Consultant selection team (CST)--The department'steam that evaluates [statements of qualification,] proposals[,] and in-terviews and selects the provider based on demonstrated qualifications.

(3) Department--The Texas Department of Transportation.

(4) Department project manager--A department employeewho manages a project from project initiation and contracting throughproject close-out, including the oversight and management of deliver-ables and provider performance.

(5) Engineering and design related services--Programmanagement, construction management, feasibility studies, pre-liminary engineering, design engineering, surveying, mapping, orarchitectural related services; or professional services of an architec-tural or engineering nature that are required to or may logically orjustifiably be performed or approved by a person licensed, registered,or certified to provide the services.

(6) Executive director--The executive director of the de-partment.

(7) Indefinite deliverable contract--A contract containing ageneral scope of services that identifies the types of work that will laterbe issued under work authorizations, but does not identify deliverables,locations, or timing in sufficient detail to define the provider's respon-sibilities under the contract.

(8) Interview and Contract Guide (ICG)--A document pro-vided by the department to short-listed providers that includes instruc-tions to prepare for the interview.

(9) Multiphase contract--A project specific contract wherethe solicited services are divided into phases whereby the specific scope

of work and associated costs may be negotiated and authorized byphase as the project progresses.

(10) Non-listed category (NLC)--A formal classificationused to define a specific sub-discipline of work and provide theminimum technical qualifications for performing the work. NLCsaddress project-specific work categories not covered by the standardwork categories.

(11) Precertification--A department process conducted toverify that a provider meets the minimum technical requirements toperform work under a standard work category.

(12) Prime provider--A firm that provides or proposes toprovide architectural, engineering, or surveying services under contractwith the state.

(13) Prime provider project manager--An employee of aprime provider who serves as the point of contact for the provider tocoordinate project deliverables and project performance with the de-partment.

(14) Professional Engineering Procurement Services(PEPS) Division--The department's division responsible for oversee-ing procurement planning, provider selection, leading the contractnegotiations, administering the contract, and processing invoices.

(15) Professional Engineering Procurement Services(PEPS) Division Director--The head of the PEPS Division.

(16) Proposal--A response to a request for proposal thatprovides details on a provider's specific technical approach and quali-fications.

(17) Provider--A prime provider or subprovider.

(18) Relative importance factor (RIF)--The numericalweight assigned to an evaluation criterion, used by the consultantselection team to score [statements of qualification,] proposals[,] andinterviews.

(19) Request for proposal (RFP)--A public announcementthat advertises the department's intent to enter into an architectural, en-gineering, or surveying contract [A document provided by the depart-ment to short-listed providers that provides instructions for submittinga proposal and may include instructions to prepare for the interview].

[(20) Request for qualification (RFQ)--A public announce-ment that advertises the department's intent to enter into an architec-tural, engineering, or surveying contract and provides instructions forthe preparation and submittal of a statement of qualification generallyreferred to as a solicitation.]

(20) [(21)] Short list--The list of prime providers mostqualified to perform the services specified in an RFP [RFQ], asdemonstrated by the proposal [statement of qualification] scores.

[(22) Solicitation--A request for qualification.]

(21) [(23)] Specific deliverable contract--A contract con-taining a specific scope of services that identifies deliverables, loca-tions, and timing in sufficient detail to define the provider's responsi-bilities under the contract, although additional requirements may laterbe specified in work authorizations.

(22) [(24)] Standard work category--A formal classifica-tion, developed by the department, used to define a specific sub-groupof work and provide the minimum technical qualifications for perform-ing the work.


[(25) Statement of qualification (SOQ)--A document pre-pared by a prime provider, submitted in response to a request for qual-ification.]

(23) [(26)] Subprovider--A firm that provides or supports,or proposes to provide or support, architectural, engineering, or sur-veying services under contract with a prime provider.

§9.32. Selection Processes, Contract Types, Selection Types, andProjected Contracts.

(a) Selection processes. The department will issue RFPs[solicitations] and select providers under the following selectionprocesses: non-federal under §9.34 of this subchapter (relating toNon-federal Process) [comprehensive], federal under §9.35 of thissubchapter (relating to Federal Process), [streamlined, accelerated,]emergency under §9.38 of this subchapter (relating to EmergencyContract Process), and urgent and critical under §9.39 of this subchap-ter (relating to Urgent and Critical Process).

(b) Contract types. The department will offer three types ofcontracts: indefinite deliverable, specific deliverable, and multiphase.

(1) An indefinite deliverable contract may be used for a sin-gle project or for multiple projects. The RFP [solicitation] will describethe typical work types to be performed under the contract.

(A) Categorical limitations on contract dollar valuemay be established by the executive director or the executive director'sdesignee.

(B) The contract period in which work authorizationsmay be issued may not be longer than four [three] years after the date ofcontract execution, unless approved by the Texas Transportation Com-mission.

(C) Supplemental agreements may be issued to extendthe contract period, but only as necessary to complete work on an ex-isting work authorization. The contract period for contracts procuredusing the process provided by §9.35 of this subchapter may not extendmore than five years beyond the execution date.

(2) A specific deliverable contract may be used for a singleproject or for multiple projects. The RFP [solicitation] will specify thespecific deliverables to be provided under the contract.

(3) A multiphase contract may be used for a single projector for multiple projects. The RFP [solicitation] will describe the ser-vices to be provided under the contract and will divide the services intophases. The specific scope of work may be established, and the associ-ated costs negotiated and authorized, by phase as the project progresses.

(c) Selection types.

(1) Single contract selection. One contract will result fromthe RFP [solicitation].

(2) Multiple contract selection. More than one contract ofsimilar work types will result from the RFP [solicitation]. The RFP[solicitation] will indicate the number and type of contracts.

(d) Projected contracts list. Quarterly, the department willpublish on the department's website a list of projected contracts forarchitectural, engineering, and surveying services.

§9.33. Precertification.(a) Standard work categories. Precertification establishes the

minimum technical qualifications to perform work under a standardwork category. The department may add, revise, or delete a standardwork category.

(b) Contract eligibility.

(1) To be eligible to perform work under a standard workcategory, a firm providing a task leader must have active precertifi-cation status in that work category by the closing date of the RFP[solicitation].

(2) The department will not delay the selection process orthe contract execution to accommodate a provider that is not in activeprecertification status.

(c) Precertification status of firms and employees.

(1) A firm is precertified in a standard work category onlyif it employs an individual precertified in that category.

(2) A firm that employs an individual who is precertified inmultiple standard work categories is, by extension, precertified in eachof those categories.

(3) A firm's precertification status is only applicable to theincorporated business entity that employs the individual upon whomthe firm's precertification status is based and does not extend to a sub-sidiary, affiliate, or parent of the incorporated entity.

(4) An employee's precertification status is based solely onthe individual's qualifications. A firm's qualifications may not serve asa basis for precertifying an employee.

(5) Precertification status shall transfer with the employee,should the employee leave the firm.

(d) Precertification website. The department will maintain aprecertification website that will include:

(1) the definitions of the standard work categories;

(2) the minimum technical qualifications to perform workunder the standard work categories; and

(3) the precertification application form, with instructions.

(e) Application and review process.

(1) To apply for precertification in a standard work cate-gory, a firmmust employ an individual qualified to become precertifiedin that category and present the individual's qualifications in a precer-tification application.

(2) The department will consider the following factors inreviewing an application:

(A) the minimum technical qualifications as applicable;

(B) the individual's professional license or registration;

(C) the individual's experience and training; and

(D) any record that shows that the individual or the firmis the subject of a final administrative or judicial determination that theemployee or firm has violated a statute or rule of a state licensing entityrelated to occupational or professional conduct.

(3) If a submitted application is incomplete or inaccurate,the firm will be given an opportunity to correct the application andprovide additional information. The firm must provide the informationwithin 30 days after the day that it receives the department's notice thatthe application is incomplete or inaccurate.

(4) If the information is not provided under paragraph (3)of this subsection within the 30-day period prescribed by that para-graph, the application will be processed at the end of that 30-day periodwith the information available.

(5) The department will make a good faith effort to makea precertification determination within 60 days after the day that the


department receives a complete and accurate application or if para-graph (4) of this subsection applies, within 60 days after the day thatthe 30-day period prescribed by that paragraph ends.

(f) Appeal. A firm may appeal a precertification denial to thedepartment by submitting additional information within 30 days afterthe day that it receives written notification of the denial. The informa-tion must justify why precertification should be granted. The depart-ment will review the information and make a second precertificationdetermination. A firm may file a written complaint regarding a secondprecertification denial to the executive director or the executive direc-tor's designee.

(g) Updates. A firm must report any change in its applicationinformation no later than 45 days after the day that the change occurs.

(h) Datamanagement. A firm's application informationwill bemaintained in the Consultant Certification Information System (CCIS).

(i) Annual renewal. To maintain contract eligibility, a firmmust renew its precertification status no later than March 31 of eachyear. The firm must submit its annual renewal through the CCIS.

(1) A firm that has renewed its precertification status by theannual deadline will maintain an active precertification status in thestandard work categories in which it is precertified.

(2) A firm that has not renewed its precertification by theannual deadline will be placed in inactive status.

§9.34. Non-federal [Comprehensive] Process.(a) Applicability. The non-federal [comprehensive] process,

also referred to as the state process, described under this section maybe used for contracts that are [must be used for any specific deliverablecontract that is $1 million or more in value and is] not subject to §9.35of this subchapter (relating to Federal Process).

(b) Administrative qualification.

(1) Administrative qualification is a process used by the de-partment to verify that a provider performing engineering and designrelated services has an indirect cost rate that meets department require-ments. Except as provided by paragraph (8) of this subsection, to com-pete for a contract under this section a provider performing engineeringand design related services either must be administratively qualified ormust accept an indirect cost rate under paragraph (7) of this subsection.

(2) Factors in determining administrative qualification.

(A) A provider may demonstrate administrative quali-fication by an audit or by self-certification.

(i) An audit may be performed by an independentcertified public accountant (CPA), an agency of the federal govern-ment, another state transportation agency, or a local transit agency. Anaudit performed by an independent CPA must be conducted in accor-dance with the current versions of 48 C.F.R. Part 31, the Generally Ac-cepted Government Auditing Standards (GAGAS), and the AmericanAssociation of State Highway and Transportation Officials (AASHTO)Uniform Audit and Accounting Guide. The provider must provide thedepartment with unrestricted access to the audit work papers, records,and other information as requested by the department.

(ii) Self-certification may be conducted by theprovider and must include a cost report and an internal controls report.The self-certified cost report must comply with the current versions of48 C.F.R. Part 31, the GAGAS, and the AASHTO Uniform Audit andAccounting Guide. The self-certified internal control report must cer-tify the provider has internal controls in place within its organization.Both the cost report and the internal control report must be signed bya company officer and notarized.

(B) The audit or self-certification shall be based on theprovider's fiscal year. The indirect cost rate, as approved by the depart-ment, shall become effective six months after the end of the provider'sfiscal year, or immediately if filed more than six months after the endof the provider's fiscal year. It shall be effective no more than twelvemonths and shall expire eighteen months after the end of the fiscal yearupon which it is based, except that, for the purpose of competition re-ferred to in paragraph (1) of this subsection, negotiations referred toin subsection (b)(5) of this section, or administratively qualified under§9.35(b) of this subchapter, the department may extend an approved in-direct cost rate for 90 days if the department has received the provider'sannual administrative qualifications information submittal before therate's expiration date.

(C) A provider must submit on an annual basis:

(i) a cognizant letter of concurrence issued by a statetransportation agency in accordance with the AASHTOUniform Auditand Accounting Guide; or

(ii) a compensation analysis for all executives andemployees in accordance with the AASHTO Uniform Audit and Ac-counting Guide for which the provider may use either the NationalCompensation Matrix or surveys as prescribed in the AASHTO Uni-form Audit and Accounting Guide.

(D) A provider's payment of a bonus or incentive com-pensation to an employee is allowable only if the bonus or compensa-tion is paid under a written bonus plan that:

(i) is consistent with the AASHTO Uniform Auditand Accounting Guide that identifies eligibility requirements and pro-vides details regarding how bonus payments are determined; and

(ii) includes an adequate description of the perfor-mance measures used to determine bonus amounts, such as employeeperformance evaluation ratings, contributions toward the firm's rev-enue growth, and responsibilities for cost containment.

(E) A provider must submit on an annual basis thesalary rates for employees that it anticipates using on contracts thatmay be executed during the next 12-month period. The departmentwill review the salary rates for reasonableness and consistency withindustry norms and, when approved, will apply the rates to contractsnegotiated within the next 12-month period. During the 12-monthperiod, the provider must submit the salary rate for any employee whois used on a contract and whose salary rate has not been provided underthis subparagraph. The department will continue to negotiate contractson an individual basis during the initial 12-month implementationperiod.

(F) The department may audit the indirect cost rate of aprovider under contract with, or seeking to do business with, the depart-ment. These audits will be conducted in accordance with the criteriaoutlined in this subsection.

(G) A provider must submit a signed Certification of Fi-nal Indirect Costs with the audit report or self-certification. The certi-fication must follow the requirements of the Federal Highway Admin-istration.

(H) The department will treat the cost data as confiden-tial pursuant to 23 U.S.C. Section 112 and 23 C.F.R. Part 172.

(3) Submittal and review process for administrative quali-fication.

(A) A provider must submit its administrative qualifica-tion information to the department in accordance with the instructionson the department's website.


(B) Upon review of an audit report or self-certificationreceived from a provider, the department may request additional infor-mation from the provider. If the submittal is not complete and accu-rate, the department will return it to the provider for correction. Theprovider shall submit the additional information or the corrected ad-ministrative qualification submittal within 30 days after the day thatit receives the department's request. If the information is not receivedwithin the 30-day period, the department will reject and not process theadministrative qualification submittal.

(C) If an administrative qualification submittal isrejected under subparagraph (B) of this paragraph, the provider mayrefile a corrected audit report or self-certification and shall includeany previously requested information. The provider may not refileearlier than 90 days after the day that the department sends the noticerejecting the submittal.

(D) The department will make a good faith effort tocomplete the administrative qualification review process within 60days after the day that it receives a complete and accurate audit reportor self-certification.

(4) Administrative qualification is applicable only to the in-corporated business entity upon which the indirect cost rate is basedand does not extend to a subsidiary, affiliate, or parent of the incorpo-rated entity, except as provided by this paragraph. A corporation mayadministratively qualify a business segment of the corporation if thebusiness segment is not limited to a geographical area that is less thanthe entire state of Texas and if the corporation is able to demonstrateand justify the allocation of costs between the business segment andother corporate operations. If a corporate business segment is admin-istratively qualified, the resulting indirect cost rate is not applicable tostaff not employed by the business segment.

(5) In negotiations under §9.38 [9.40] of this subchapter(relating to Emergency Contract Process [Negotiations]), the depart-ment will use the selected firm's indirect cost rate information that is ineffect at that time the negotiations begin.

(6) The department will not provide a firm's administrativequalification information, including salary information, to the depart-ment's staff conducting negotiations or the consultant selection teambefore the selection of that firm.

(7) Providers not administratively qualified. The depart-ment may contract with a prime provider or allow the use of a sub-provider that is not administratively qualified if:

(A) the provider has been in operation, as currently or-ganized, for less than one fiscal year and the provider accepts an indi-rect cost rate developed by the department; or

(B) on request by the department during the selectionprocess, the prime provider provides written certification that the primeprovider or subprovider, as applicable, does not have an indirect costrate audit and will accept an indirect cost rate developed by the depart-ment.

(8) Exemptions to administrative qualification.

(A) A non-engineering firm is exempt from the admin-istrative qualification requirement of this section.

(B) A provider performing a service under standardwork category 18.2.1, subsurface utilities engineering, or any of thefollowing work groups, as listed on the department's precertificationwebsite, is exempted from administrative qualification, to the extentof the service being performed:

(i) Group 6, bridge inspection;

(ii) Group 12, materials inspection and testing;

(iii) Group 14, geotechnical services;

(iv) Group 15, surveying and mapping; [and]

(v) Group 16, architecture; and [.]

(vi) Group 17, facilities engineering.

(C) The department may exempt services other thanthose indicated in subparagraph (B) of this paragraph on a case-by-casebasis. Any request for an exemption must be received by the depart-ment by the closing date of the RFP [solicitation].

(c) Consultant selection team (CST).

(1) The department shall use a CST in selecting providersunder this section.

(2) The CST shall be composed of at least three departmentemployees.

(3) At least one CST member must be a professional engi-neer, for engineering contracts; a registered architect, for architecturalcontracts; and either a professional engineer or registered professionalland surveyor, for surveying contracts.

(4) If a CST member leaves the CST during the selectionprocess, the processmay continuewith the remainingmembers, subjectto paragraph (3) of this subsection.

(d) Request for proposals [qualifications (RFQ)]. Not fewerthan 14 calendar days before the RFP [solicitation] closing date, thedepartment will post on a web-based bulletin board an RFP [RFQ]providing the contract information and specifying the requirements forpreparing and submitting a proposal [statement of qualification].

(e) Proposal [Statement of qualification (SOQ)]. To be consid-ered, a proposal [an SOQ]must comply with the requirements specifiedin the RFP [RFQ].

(f) Replacements.

(1) An individual may be proposed as a replacement for theprime provider project manager prior to the department's notificationof firms short-listed for an interview or, if an interview is not required,prior to selection.

(2) An individual may be proposed as a replacement for atask leader prior to contract execution.

(3) A proposed replacement for the prime provider projectmanager must be an employee of the prime provider. A proposed re-placement for a task leader must be an employee of the prime provideror its subprovider. A proposed replacement for either position mustsatisfy the applicable precertification and non-listed category require-ments.

(g) Proposal [SOQ] screening and evaluation.

(1) The department may disqualify a proposal [an SOQ] ifthe department has knowledge that a firm on the project team or anemployee of a firm on the project team is the subject of a final adminis-trative or judicial determination that the firm or employee has violateda statute or rule of a state licensing entity related to occupational orprofessional conduct.

(2) If a proposal [an SOQ] is not disqualified under para-graph (1) of this subsection, the CST will screen the proposal [SOQ]to determine whether it complies with the requirements specified in theRFP [RFQ]. Each proposal [SOQ] that meets these requirements willbe considered responsive to the RFP [RFQ] and evaluated.


(3) The CST will evaluate the responsive proposal [SOQ]according to the evaluation criteria detailed in the RFP [RFQ] basedon factors the department has identified as most likely to result in theselection of the most qualified provider, including the prime provider'spast performance scores, as contained in the department's database, thatreflect less than satisfactory performance.

(h) Short list. The short list will consist of the most qualifiedproviders, as indicated by the proposal [SOQ] scores.

(1) For single contract selections, the minimum number ofshort-listed prime providers is three, unless fewer than three primeproviders submitted a responsive proposal [SOQ].

(2) For multiple contract selections, the minimum numberof short-listed prime providers is the number of desired contracts plusthree, unless fewer than the desired number of prime providers submit-ted a responsive proposal [SOQ].

(3) Notification.

(A) The department will notify each prime provider thatsubmitted a proposal [an SOQ] whether it was short-listed.

(B) The department will notify each short-listed primeprovider whether a short list meeting will be held.

(i) Short list evaluation.

(1) An interview is required for any specific deliverablecontract that is $5 million or more in value or any indefinite deliver-able contract for higher-risk services as determined by the departmentbased on project complexity, anticipated project costs, number of con-tracts, or type of services.

(2) [(1)] The RFP will state whether an interview will berequired as part of the short list evaluation. [Interviews. The depart-ment will evaluate the short-listed providers through interviews.] Thedepartment will issue an Interview and Contract Guide (ICG) to eachshort-listed prime provider. The ICG will provide contract informationand specify the requirements for the interview.

(3) [(2)] [Short list evaluation criteria.] The CST will eval-uate the interviews according to the criteria specified in the ICG[, in-cluding the prime provider's past performance scores in the ConsultantCertification Information System database reflecting less than satisfac-tory performance].

(j) Selection.

(1) Basis of final selection.

(A) If interviews are required, the [The] CSTwill selectthe best qualified provider, as indicated by the interview [short list]scores.

(B) If interviews are not required, the CST will selectthe best qualified provider, as indicated by the proposal scores.

(2) Tie scores. The PEPS Division Director will break a tieusing the following method.

(A) The first tie breaker will be the scores for:

(i) the interview criterion with the highest RIF; or [.]

(ii) if interviews are not required, the proposal crite-rion with the highest RIF.

(B) The remaining [interview] criteria shall be com-pared in the order of decreasing RIF until the tie is broken.

(C) If the providers have identical scores on all of the[interview] criteria, the provider will be chosen by random selection.

(3) Notification. The department will:

(A) provide written notification to the prime providerselected for contract negotiation and arrange a meeting to begin con-tract negotiations;

(B) provide written notification to each short-listedprime provider that was not selected, notifying the provider of thenon-selection; and

(C) publish the short list and the selected provider on aweb-based bulletin board.

(4) Appeal. A provider may file a written appeal concern-ing the selection process with the executive director or the executivedirector's designee as provided under §9.7 of this chapter (relating toProtest of Contract Practices or Procedures).

§9.35. Federal Process.(a) Applicability. This section applies to engineering or de-

sign related service contract directly related to a highway construc-tion project and reimbursed with federal-aid highway program (FAHP)funding.

(b) Administrative qualification. A firm providing engineer-ing and design related services must be administratively qualifiedunder §9.34(b)(2) - (6) of this subchapter (relating to Non-federal[Comprehensive] Process), or use an indirect cost rate applicableunder Federal Highway Administration regulations or guidelines,by the closing date of the RFP [Request For Proposal] to competefor contracts under this section. Section 9.34(b)(7) and (8) of thissubchapter do not apply to a contract under this section.

(c) Consultant selection team (CST); replacements. Section9.34(c) and (f) of this subchapter apply to contract procurement underthis section.

(d) Request for proposal (RFP). Section 9.34(d) of this sub-chapter applies to contract procurement under this section. [Not fewerthan 14 calendar days before the solicitation closing date, the depart-ment will post on a web-based bulletin board an RFP providing thecontract information and specifying the requirements for preparing andsubmitting a proposal.]

(e) Proposal; screening and evaluation. Section 9.34(e) and(g) of this subchapter apply to the contract procurement under this sec-tion.[To be considered, a proposal must comply with the requirementsspecified in the RFP.]

(f) [Proposal screening and evaluation.]

[(1) The department may disqualify a proposal if the de-partment has knowledge that a firm on the project team or an employeeof a firm on the project team is the subject of a final administrative orjudicial determination that the firm or employee has violated a statuteor rule of a state licensing entity related to occupational or professionalconduct.]

[(2) If a proposal is not disqualified under paragraph (1) ofthis subsection, the CST will screen the proposal to determine whetherit complies with the requirements specified in the RFP. Each proposalthat meets these requirements will be considered responsive to the RFPand evaluated.]

[(3) The CSTwill evaluate the responsive proposal accord-ing to the evaluation criteria detailed in the RFP based on factors thedepartment has identified as most likely to result in the selection of themost qualified provider.]

[(g) ] Short list; evaluation; selection. Section §9.34(h) - (j) ofthis subchapter apply to the contract procurement under this section.


[The short list will consist of the most qualified providers, as indicatedby the proposal scores.]

[(1) For single contract selections, the minimum numberof short-listed prime providers is three, unless fewer than three primeproviders submitted a responsive proposal.]

[(2) For multiple contract selections, the minimum numberof short-listed prime providers is the number of desired contracts plusthree, unless fewer that the desired number of prime providers submit-ted a responsive proposal.]

[(3) Notification.]

[(A) The department will notify each prime providerthat submitted a proposal whether it was short-listed.]

[(B) The department will notify each short-listed primeprovider whether a short list meeting will be held.]

[(h) Selection process.]

[(1) The department will determine whether interviews arerequired for each solicitation and notify providers in the RFP.]

[(A) If interviews are required, §9.34 (i) and (j) of thissubchapter are applicable for this process.]

[(B) If no interviews are required, the CST will selectthe best qualified provider, as indicated by the proposal scores, whichwill include evaluation of the prime provider's past performance scoresin the department's evaluation database reflecting less than satisfactoryperformance. Also, §9.34(j)(2)-(4) of this subchapter are applicable forthis process.]

[(2) An interview is required for any specific deliverablecontract that is $1 million or more in value or any indefinite deliverablecontract for higher-risk services as determined by the department basedon anticipated project costs, number of contracts, or type of services.]

§9.38. Emergency Contract Process.

(a) Applicability. The emergency contract process describedin this section may be used when the executive director or the execu-tive director's designee certifies in writing that an emergency situation,including a safety hazard, a substantial disruption of the orderly flowof traffic and commerce, or a risk of substantial financial loss to thedepartment, exists, and that an architectural, engineering, or surveyingservices contract is needed to address the situation.

(b) Administrative qualification. If the emergency contract isan engineering or design related services contract directly related to ahighway construction project and reimbursed with federal-aid highwayprogram (FAHP) funding, a providermust be administratively qualifiedto compete for the contract, and §9.34(b)(2)-(6) of this subchapter (re-lating to Non-federal [Comprehensive] Process) applies to this section.If the contract is not such a contract, a provider need not be admin-istratively qualified to compete for the contract, and §9.34(b) of thissubchapter applies to this section.

(c) Notification.

(1) After an emergency is certified, the department will re-view its list of precertified firms. If there are a sufficient number offirms, the department will notify at least three of these firms.

(2) The department will inform the firms of the nature ofthe emergency and will provide the firms with the specifications forthe remedy.

(d) Evaluation and selection. The department will evaluateeach firm's qualifications and select the best qualified firm to performthe services.

§9.39. Urgent and Critical Process.(a) Applicability. The urgent and critical process described in

this section may be used when the executive director certifies in writingthat an urgent and critical need exists that cannot otherwise be met, thatthere is sufficient objective reason to believe that a specific provider isthe most qualified to perform these architectural, engineering or surveyservices based on that provider's demonstrated competence and qual-ifications, and that federal funds will not be involved in the contract.An urgent and critical need, is a circumstance that does not rise to thelevel of an emergency situation as described in §9.38 of this subchapter(relating to Emergency Contract Process), but does expose the depart-ment to an undue additional cost, that unless promptly addressed couldescalate to an emergency situation.

(b) Administrative qualification. Providers under this sectionare subject to §9.34(b) of this subchapter (relating to Non-federal[Comprehensive] Process).

(c) Process.

(1) After an urgent and critical need has been identified thedepartment will review its list of pre-certified firms and survey avail-able information to identify firms that are most qualified to perform thework needed to resolve the urgent and critical need.

(2) The executive director will determine whether there issufficient information to determine that one provider is objectively themost qualified to perform this work.

(3) If information is not sufficiently available for the exec-utive director to make this determination, the department may followthe process described in §9.38(c) and (d) of this subchapter to identifythe most qualified firm.

§9.40. Negotiations.(a) Contract negotiations.

(1) A contract that is subject to §9.34 of this subchapter(relating to Non-federal Process) or §9.35 of this subchapter (relating toFederal Process) [§§9.34, 9.35, 9.36, or 9.37 of this subchapter (relatingto Comprehensive Process, Federal Process, Streamlined Process, orAccelerated Process, respectively)] will be negotiated in accordancewith this subsection.

(2) The department will enter negotiations with a selectedprime provider to establish a satisfactory contract containing a fair andreasonable price for the services.

(3) A selected prime provider shall submit to the depart-ment the actual salary rates for the proposed team members and thenon-salary costs, generated internally, to be billed directly. The depart-ment will reference this information in the negotiations.

(4) The department anticipates that a satisfactory contractcontaining a fair and reasonable price for the services may be nego-tiated within 30 days after the date that a selected prime provider isnotified of the selection. If an RFP [a solicitation] specifies that morethan one contract will be awarded, the time for negotiating the contractsis automatically extended by a period equal to the number of additionalcontracts to be awarded under that RFP [solicitation] multiplied by fivedays. The department may grant additional extensions as required. TheRFP [solicitation] may specify a shorter or longer time for the negoti-ations.

(5) If the department determines that a fair and reasonableprice cannot be negotiated, the department will terminate negotiationswith the selected prime provider and proceed under this paragraph.

(A) Single contract selection. The department will be-gin negotiations with the next highest-ranked prime provider. This


process will continue as necessary through the three highest-rankedprime providers. If a fair and reasonable price cannot be negotiatedwith any of the three highest-ranked prime providers, the proposed con-tract shall be canceled. If the proposed contract is canceled, it may bere-advertised.

(B) Multiple contract selection. The department willbegin negotiations with the next highest-ranked prime provider not se-lected for a contract. This process will continue as necessary throughthe short-listed prime providers. If a fair and reasonable price cannotbe negotiated with any of the short-listed prime providers, the proposedcontract shall be canceled. If the proposed contract is canceled, it maybe re-advertised.

(b) Emergency contract negotiations.

(1) Contracts subject to §9.38 of this subchapter (relatingto Emergency Contract Process) will be negotiated in accordance withthis subsection.

(2) The department will enter negotiations with the se-lected provider to establish a satisfactory contract containing a fairand reasonable price for the services.

(3) If the department determines that a fair and reasonableprice cannot be negotiated, the department will terminate negotiationswith the provider and begin negotiations with the next highest-rankedprovider. This process will continue as necessary through the notifiedfirms.

(4) If a fair and reasonable price cannot be negotiated withany of the notified firms, the department may take any measure neces-sary to identify and solicit a firm that is able to perform the services.

(c) Urgent and critical negotiations. The department will ne-gotiate with the selected firm to establish a fair and reasonable priceand the executive director will execute any agreement.

(d) Indefinite deliverable work authorization negotiations.

(1) Indefinite deliverable work authorizations will be ne-gotiated in accordance with this subsection.

(2) The department will enter negotiations with a selectedprime provider to establish a satisfactory work authorization containinga fair and reasonable price for the services.

(3) If the department determines that a fair and reasonableprice cannot be negotiated, the department will terminate negotiationswith the prime provider and begin negotiations with another primeprovider with an indefinite deliverable contract.

§9.41. Contract Administration.

(a) Prime provider's percentage of work. A prime providershall perform at least 30 percent of the contracted work with its ownwork force, unless otherwise approved by the department.

(b) Project manager replacement. The prime provider projectmanager may not be replaced without the prior written consent of thedepartment.

(c) Department audits. The department may perform interimand final audits.

(d) Performance evaluations.

(1) The department project manager will document theprime provider's performance on the contract by evaluating the primeprovider project manager and the firm and may include evaluation ofthe prime provider's employee who is assisting with the managementof a work authorization. Evaluations will be conducted at least once

every 12 months [during the ongoing contract activity] and at thecompletion of the contract.

(2) Further evaluations pertaining to project constructabil-ity may be conducted during project construction and at the completionof the construction contract.

(3) The department will give a copy of each completed per-formance evaluation to the prime provider for review and comment.The prime provider's comments will be entered into the department'sevaluation database.

(4) Performance evaluation scores will be entered into thedepartment's evaluation database and may be used for the purpose ofprovider selection.

(e) Negotiated resolution of disputes. To every extent possi-ble, disputes between a prime provider and the department's projectmanager should be resolved during the course of the contract.

(f) Prime provider performance evaluation dispute review.

(1) If a resolution is not reached with the department'sproject manager and district engineer or division director, the primeprovider may request a review by the PEPS Division Director by sub-mitting a written request for review to the PEPS Division Director notlater than 10 days after the date of receipt of a final signed performanceevaluation. In the written request, the prime provider must identify theissue or error and provide supporting information.

(2) The PEPS Division Director will gather information,study relevant issues, and meet informally with the prime provider andrelevant department staff. The PEPS Division Director may void theperformance evaluation, request a re-evaluation or adjustment, or af-firm the original performance evaluation. The PEPS Division Directorwill provide the decision to the prime provider in writing. The PEPSDivision Director's decision is final.

(g) Resolution of contracting or compensation disputes. If res-olution of a contracting or compensation dispute between the primeprovider and department's project manager or district engineer is notreached, the PEPS Division Director may in the director's discretionparticipate in the resolution of the dispute. The prime provider mayfile a written claim under §9.2 of this chapter (related to Contract ClaimProcedure).



♦ ♦ ♦43 TAC §9.36, §9.37STATUTORY AUTHORITYThe repeals are proposed under Transportation Code, §201.101,which provides the Texas Transportation Commission (commis-sion) with the authority to establish rules for the conduct of thework of the department.


CROSS REFERENCE TO STATUTES IMPLEMENTED BYTHIS RULEMAKINGGovernment Code, Chapter 2254, Subchapter A (ProfessionalServices Procurement Act) and Transportation Code, §223.041.§9.36. Streamlined Process.

§9.37. Accelerated Process.



♦ ♦ ♦


Texas Register August 13, 2021 issue

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